Corporate Officers

You must withhold Minnesota income tax from any compensation given to officers, including cash, goods, or services in exchange for working. Examples of goods include novelty items, clothing, items from your inventory, or tuition reductions for educational institutions. Examples of services include accounting, cleaning, remodeling, or repair work.

You must pay wages to corporate officers separately from any payments of dividends or distributions. Any loans between an officer and a corporation should be well-documented and bear interest. There must be a valid debtor-creditor relationship. For guidance on interest rates for loans, call the IRS at 1-800-829-1040.

Withhold tax from anyone who works in Minnesota. Do not withhold Minnesota tax from nonresidents who will earn less in Minnesota wages than the minimum income required to file a Minnesota Individual Income Tax return. The minimum filing requirement changes each year. For tax year 2023, this amount is $13,825.

Employees Who are Residents of Michigan or North Dakota. Minnesota has income tax reciprocity agreements with Michigan and North Dakota. Generally, under these agreements, only the home state will tax personal service income the resident earned while working in a reciprocity state. If an employee who is a resident of a reciprocity state gives you a completed Form MWR, Reciprocity Exemption/Affidavit of Residency, you are not required to withhold Minnesota income tax from their wages. Submit the completed Form MWR to the Minnesota Department of Revenue.

Before you start withholding Minnesota income tax from your employees’ wages, you must have a Minnesota Tax ID Number and be registered for withholding tax. We can assess a $100 penalty if you fail to do so.

If you are a new employer, see Withholding Fact Sheet 10, New Employer Guide, for important information. If you do not have a Minnesota tax ID number, apply online or call us at 651-282-5225 or 1-800-657-3605.

If you already have a Minnesota ID number for other taxes for the same business, you can use the same number for withholding tax. To update your account, log in to our e-Services system.

Minnesota Withholding Allowances. You must have all new employees complete Form W-4MN, Minnesota Employee Withholding Allowance/Exemption Certificate, when they begin employment to determine the number of withholding allowances they may claim. If a new employee does not give you a complete Form W-4MN before the first wage payment, withhold Minnesota tax as if they are single with zero withholding allowances.

If an employee completed a federal Form W-4 from 2019 or prior years, you may continue to use the allowances determined on that form. If the employee completes a new Form W-4, they must complete a new Form W-4MN for Minnesota withholding allowances.

For details, see Withholding Fact Sheet 9, Definition of Wages, and Withholding Fact Sheet 10, New Employer Guide.

For payment options, see our Make a Payment page for Businesses.

You’re required to pay electronically if any of these apply:

• You withheld more than $10,000 during the last 12-month period ending June 30
• You are required to electronically pay any other Minnesota business tax
• You use a payroll service company

If you’re required to pay business taxes electronically for one year, you must do so for all future years.

You must electronically file all Minnesota withholding tax returns, including past-due and amended returns. To file electronically, see log in to e-Services.