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Backup Withholding

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When you pay someone who is not your employee to perform work for your business, that income is taxable to the individual. While your personal service payments to them do have regular withholding tax removed, they may still be subject to backup withholding.

You may need to pay backup withholding if the worker does not provide a correct Social Security Number (SSN) or other taxpayer identification number (TIN). Learn more about TINs on the IRS website.

Pay Backup Withholding

You must withhold Minnesota income tax on personal service payments if either:

  • A worker did not provide an SSN or TIN
  • A worker's SSN or TIN​ is incorrect
You must withhold tax equal to 9.85% of the personal service payments to that worker. If you do not, the Minnesota Department of Revenue may assess the amount you should have withheld plus penalties and interest.
 

Calculate Backup Withholding

Multiply the amount of the personal service payment by 9.85%, or use our Minnesota Withholding Tax calculator.

Contact Info

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