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Residents Working Outside Minnesota

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If an employee lives in Minnesota but works in another state, you may need to withhold tax for the state the employee is working in, for Minnesota, or for both.

If you employ a Minnesota resident who works in Michigan or North Dakota, see Withholding Fact Sheet 20, Reciprocity – Employee Withholding.

What state should I withhold tax for?

You must withhold Minnesota income tax for your employee if they remain a Minnesota resident.

To find out if you need to withhold tax for the state they work in, contact that state’s tax department.

How much do I need to withhold for Minnesota?

To determine Minnesota withholding:

  1. Calculate the tax that would have been withheld if your employee performed the work in Minnesota. Use our Withholding Tax Calculator to find this amount.
  2. Calculate the tax you are withholding for the state they work in.

If step 1 is more than step 2, subtract step 2 from step 1. Send this amount to the Minnesota Department of Revenue.

If step 1 is less than or equal to step 2, do not withhold Minnesota income tax. Send the amount on step 2 to the state in which the employee is working.

What if my employee is working outside the U.S.?

You must withhold Minnesota tax on wages that are subject to U.S. federal income tax withholding.

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