income tax for another state should first determine the amount of income tax to be withheld for each state. If the amount of Minnesota income tax is greater than the amount to be withheld from the state in which the employee is working, the employer should send the difference to the Minnesota Department of Revenue. If the amount to be withheld for the other state is greater than the amount to be withheld for Minnesota, do not withhold Minnesota income tax. Outside the United States. A Minnesota resident who is transferred to a location outside the United States remains a Minnesota resident unless: (1) the employee is a “qualified individual” for the foreign earned income exclusion of Section 911(d)(1) of the Internal Revenue Code, and (2) the employee does not have an interest in any homesteaded property in Minnesota. If the employee does not meet these criteria, the employer must continue to withhold Minnesota income tax from the employee’s wages. If you are required to withhold Minnesota State tax, follow the same rules as tax withheld from employees working in Minnesota. (See the section titled “Withholding Tax Deposit and Filing Requirements” below.) If the employee changes his or her domicile and requests that you stop withholding Minnesota income tax, send the Department of Revenue a copy of the employee’s W-4 and a letter explaining in detail why the employee thinks his or her domicile has changed.
WITHHOLDING TAX DEPOSIT AND FILING REQUIREMENTS
Overview Both the Internal Revenue Service and the Minnesota Department of Revenue require employers to deposit withheld tax on a periodic basis, and to file periodic returns. Deposit and filing requirements are discussed below. Employers should note that for purposes of determining the frequency of payment, federal and state withholdings are totaled separately. Deposit Requirements Annual Requirement (Federal only). Agricultural employers who accumulate less than $2,500 federal tax liability during the year may pay the tax and file the return annually. Annual Requirement (Minnesota only). Minnesota employers with $500 or less in Minnesota withholding tax in a year may be approved by the Department of Revenue to file on an annual basis. If during the year the Minnesota withholding tax exceeds $500, the employer is required to make a deposit at the end of the month following the month in which withholding tax exceeded $500. To make a deposit, the employer should use Minnesota Department of Revenue e-Services, or use a payment voucher.
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