Minnesota issues guidance on withholding responsibilities

The Minnesota Department of Revenue has updated guidance explaining the state’s personal income tax withholding and the tax responsibilities of a new employer, household employees, independent contractors and agricultural workers.

New employer. The fact sheet discusses registration for required identification numbers; federal requirements for new employees, including verification of work eligibility and Social Security numbers, Form W-4, Social Security and Medicare, and the federal unemployment tax; Minnesota requirements for new employees, including Form W-4MN, reciprocity, construction contractor withholding, state unemployment tax, worker compensation insurance, reporting of new hires; and other matters.

Household employees. Household workers are employees if the taxpayer controls not only what household work is done, but also how it is done. Taxpayers are not required to withhold Minnesota income tax from the wages of household employees. Taxpayers employing household workers are required to pay electronically if they withheld more than $10,000 during the last 12-month period ending June 30; are required to electronically pay any other Minnesota business tax; or use a payroll service company. All withholding tax returns, including past-due and amended returns, must be filed electronically using e-Services or by phone.

Independent contractors. To determine if an individual is an employee or an independent contractor, the business relationship between the employer and the individual performing the services must be examined and all evidence of control and independence must be considered. The fact sheet also discusses how to classify a worker, employees, independent contractors, steps for requesting a determination, and how to handle the incorrect classification of workers.

Agricultural workers. Guidance has been updated to reflect current information about withholding tax from wages, registering for withholding tax, and filing and paying electronically. Taxpayers employing agricultural workers are required to pay electronically if they withheld more than $10,000 during the last 12-month period ending June 30, pay electronically any other Minnesota business tax, or use a payroll service company. If the agricultural workers are paying business taxes electronically for one year, they must continue to do so for all future years. All withholding tax returns, including past-due and amended returns, must be filed electronically using e-Services or by phone using e-File Minnesota. (Withholding Tax Fact Sheet No. 10, Minnesota Department of Revenue, January 2017; Withholding Tax Fact Sheet No. 7, Minnesota Department of Revenue, January 2017; Withholding Tax Fact Sheet No. 8, Minnesota Department of Revenue, January 2017; Withholding Tax Fact Sheet No. 3, Minnesota Department of Revenue, January 2017.)

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