For complete information on federal requirements and how to determine and pay federal employment taxes, see IRS Publication 15.
Verify Work Eligibility of Employees
Use federal Form I-9 to verify eligibility for employment and identify employees hired to work in the United States. Your employees must complete Form I-9 when they begin working. As an employer, you must keep Forms I-9 on file for three years from the date of hire or for one year after the employee’s separation from service, whichever is later. You must make these forms available upon request.
For details, go to the U.S. Citizenship and Immigration Services website at www.uscis.gov or call 1-888-464-4218.
Verify Social Security Numbers
The Social Security Administration offers employers and authorized reporting agents three methods for verifying employee Social Security Numbers. Some verification methods require registration. For details, call 1-800-772-6270.
- Online: Use the Social Security Number Verification System (SSNVS). You can verify up to 10 names and numbers and receive immediate results. You can also upload batch files of up to 250,000 names and numbers and usually receive results the next business day.
- Phone: Verify up to 10 names and numbers with Telephone Number Employer Verification (TNEV) by calling 1-800-772-6270 or
1-800-772-1213. - Paper: Verify up to 300 names and numbers by submitting a paper request. For details, see Appendix A in the SSNVS handbook.
Requirements for New Employees
The amount of federal income tax to withhold from an employee’s wages is based on their filing status reported on federal Form W-4. The amount of Minnesota income tax to withhold is based on their withholding allowances and filing status on Form W-4MN, Minnesota Employee Withholding Allowance/Exemption Certificate.
To know how much federal and state income tax to withhold from employee wages, you will need both a federal Form W-4 and Minnesota Form W-4MN for each employee. Ask all new employees to complete both the federal and state forms before they begin working. The forms remain in effect until the employee gives you a new form to replace them.
If an employee does not give you completed forms, withhold tax as if they are single with zero withholding allowances. Keep all forms in your records. You must make these forms available to Revenue upon request.
Backup Withholding
Minnesota follows the federal provisions for backup withholding on payments for personal services only. Personal services include any work performed for your business by anyone who is not your employee.
If a person does not provide you with their Social Security Number or tax ID number, or if the number is incorrect, you must withhold 9.85% from their wages for state tax purposes. This is called backup withholding.
If you do not withhold the required amount, you may be liable for the tax plus any penalty and interest.
For details about Minnesota withholding, see the Minnesota Income Tax Withholding instructions.
Social Security and Medicare
The Federal Insurance Contributions Act (FICA) provides for a federal system of old-age, survivors, disability, and hospital insurance. The Social Security tax finances old-age, survivors, and disability insurance, while the Medicare tax finances hospital insurance.
Social Security and Medicare taxes are determined and reported separately and are levied on both you and your employees. As an employer, you must withhold and deposit the employee’s part of the taxes and pay a matching amount. Generally, employee wages are subject to Social Security and Medicare taxes regardless of the employee’s age or if the employee receives Social Security benefits.
For details, see federal Form 941.
Federal Unemployment Tax (FUTA)
FUTA, along with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Only the employer pays FUTA to the IRS. Do not deduct this tax from employee wages.
For details, see federal Form 940.