Nonresident entertainers Nonresident entertainers (musicians, actors, athletes, speakers, and similar performers) may be subject to a 2 percent tax on gross compensation for performances in Minnesota. • The tax applies to the entertainment entity , and the person who controls payment is responsible for withholding and depositing the tax. • The tax does not apply to North Dakota or Michigan residents who provide a properly completed Form MWR, Reciprocity Exemption/Affidavit of Residency. More detail is available in the Department of Revenue’s Nonresident Entertainer Tax materials. Minnesota residents working outside Minnesota • In other states: Employers of Minnesota residents working entirely in another state may still have to withhold Minnesota income tax if the employer has nexus with Minnesota (for example, deriving income from Minnesota, owning property here, or employing personnel here). Reciprocity with North Dakota and Michigan may change this requirement.
• If withholding is required in both states, the employer calculates each state’s tax. • If Minnesota tax is greater, the employer sends the difference to Minnesota. • If the other state’s tax is greater, the employer does not withhold Minnesota tax.
• Outside the United States : A Minnesota resident transferred abroad generally remains a Minnesota resident unless they qualify for the foreign earned income exclusion under Internal Revenue Code section 911(d)(1) and have no Minnesota homesteaded property . If they do not meet both criteria, the employer must continue to withhold Minnesota tax. If an employee claims they changed domicile and asks you to stop Minnesota withholding, send the Department of Revenue a copy of the employee’s W‑4 and a letter explaining why the employee believes their domicile has changed. Withholding tax deposit and filing requirements Federal and Minnesota deposit and filing schedules are related but calculated separately. Deposit requirements – Minnesota • Annual (Minnesota): Employers with $500 or less in Minnesota withholding for the year may be approved to file and pay annually. • If Minnesota withholding exceeds $500 during the year, the employer must deposit the excess by the end of the month after the month in which the $500 threshold was exceeded. • Quarterly : If state withholding is $1,500 less in the prior quarter, the employer may pay the full amount quarterly, due the last day of the month following the quarter. • General rule: If you withheld more than $1,500 in Minnesota tax in the previous quarter, you must make Minnesota deposits as often as your federal deposit schedule requires (monthly or semiweekly).
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