Minnesota Withholding laws & HR compliance analysis

Minnesota Withholding: What you need to know

All Minnesota employers are required to deduct state income tax from the paychecks of both resident and nonresident employees. Withholding may be based on wage bracket withholding tables or a computer formula provided by the Department of Revenue (DOR).
Employees must complete federal Form W-4 to determine the number of federal withholding allowances to claim. If an employee is claiming the same number of Minnesota allowances as federal, and the number claimed is 10 or less, Form W-4MN is not required. Employers use the same number as on the employee’s federal Form W-4 to determine the amount of Minnesota income tax to withhold. Employees are required to complete both forms only if they:
• Claim fewer Minnesota withholding allowances than their federal allowances (Minnesota allowances cannot exceed the number of federal allowances),
• Claim more than 10 Minnesota withholding allowances,
• Want additional Minnesota withholding deducted from their pay each pay period, or
• Claim to be exempt from Minnesota withholding.
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Supplemental payments. If an employer makes supplemental payments to an employee at a different time than it pays regular wages, the tax tables are not used to determine how much to withhold. Instead, regardless of the number of withholding allowances the employee claimed, the required withholding is 6.25 percent of the payment. If a supplemental payment is made to an employee at the same time regular wages are paid and the two payments are listed separately on the employee’s payroll records (regardless of whether the amounts are listed separately on the paycheck), one of the following methods may be used to determine how much to withhold:
Method 1. Add the regular wages to the supplemental ...

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