Withholding and Tax Filing Information Related to Wisconsin-Minnesota Income Tax Reciprocity Termination

The reciprocity agreement between Wisconsin and Minnesota expired January 1, 2010. The agreement allowed residents of one state to file a single income tax return with their home state if they worked across the border. It is estimated the cancellation affects 57,000 Wisconsin residents and 22,000 Minnesota residents.

While there is currently no agreement in place, Wisconsin and Minnesota continue to discuss the possibility of resuming income tax reciprocity in an effort to make it easy and simple for taxpayers in both states to file their income tax returns.

Information for Workers

  1. Wisconsin residents working in Minnesota
  2. Minnesota residents working in Wisconsin

Information for Employers

  1. Wisconsin employers that employ Minnesota residents
  2. Minnesota employers that employ Wisconsin residents

  1. I am a resident of Wisconsin working in Minnesota. How does the ending of the reciprocity agreement affect me?

    Beginning January 1, 2010, your Minnesota employer will withhold Minnesota income taxes from personal service income, such as salaries, wages, commissions and fees.

    Your Minnesota employer will use the Federal Form W-4, Employee's Withholding Allowance Certificate, to determine the amount of Minnesota income tax to be withheld from your wages. Contact your Minnesota employer if you have questions about Form W-4.

    Will my employer withhold Wisconsin tax from my wages?

    No, Wisconsin income taxes will not be withheld from that income. See special withholding arrangement announced by the Secretary of Revenue.

    Will I need to make Wisconsin estimated tax payments?

    Every situation is different but generally, the credit for income tax paid to Minnesota will offset the Wisconsin income tax on the Minnesota wages so estimated tax payments will not be required. However, if you have income not subject to withholding such as interest, dividends, capital gains, unemployment compensation, etc., you may need to make estimated tax payments.

    What do I need to do?

    • File a 2013 Minnesota income tax return in 2014 as a nonresident. All personal service income earned in Minnesota will be reported to Minnesota.

    • File a 2013 Wisconsin income tax return (Form 1) in 2014. You will report all income received, including wages earned in Minnesota, on your Wisconsin return. Wisconsin will allow a credit for the net income tax paid to Minnesota on income that is taxed by both Wisconsin and Minnesota.

    Questions?

    If you have questions about Wisconsin income tax, contact the Wisconsin Department of Revenue:

    If you have questions about Minnesota income tax, contact the Minnesota Department of Revenue:

  2. I am a resident of Minnesota working in Wisconsin. How does the ending of the reciprocity agreement affect me?

    Beginning January 1, 2010, your Wisconsin employer will withhold Wisconsin income taxes from your personal service income such as salaries, wages, commissions and fees earned.

    What do I need to do?

    • File a Form WT-4, Wisconsin Withholding Exemption Certificate, with your Wisconsin employer. Form WT-4 is used to determine the amount of Wisconsin income tax to be withheld from your wages. Contact your Wisconsin employer if you have questions about the completion of Form WT-4.

    • File a 2013 Wisconsin nonresident income tax return (Form 1NPR) in 2014 if your Wisconsin income was $2,000 or more. All wages earned in Wisconsin are taxable by Wisconsin.

    • File a 2013 Minnesota income tax return in 2014. You will report all of your income received, including wages earned in Wisconsin, on your Minnesota tax return. Minnesota may allow a credit for income taxes paid to Wisconsin on income that is taxed by both Wisconsin and Minnesota.

    Questions?

    If you have questions about Wisconsin income tax, contact the Wisconsin Department of Revenue:

    If you have questions about Minnesota income tax, contact the Minnesota Department of Revenue:

  3. I am a Wisconsin employer that employs Minnesota residents. How does the ending of the reciprocity agreement affect me?

    Beginning January 1, 2010, you must withhold Wisconsin income taxes on wages of Minnesota residents working in Wisconsin. You should ask these employees to complete a Form WT-4, Wisconsin Withholding Exemption Certificate. Form WT-4 is used to determine the amount of Wisconsin income tax to be withheld from employee wages.

    You may no longer accept Form W-222, Statement of Minnesota Residency. Form W-222 was previously used by Minnesota residents working in Wisconsin to claim exemption from withholding of Wisconsin income taxes.

  4. I am a Minnesota employer that employs Wisconsin residents. How does the ending of the reciprocity agreement affect me?

    1. Minnesota Withholding – Beginning January 1, 2010, you must withhold Minnesota income taxes on the wages of Wisconsin residents working in Minnesota. Use federal Form W-4, Employee's Withholding Allowance Certificate, to determine the amount of Minnesota income tax to be withheld from your employees' wages.

    2. Wisconsin Withholding – Employers are not required to withhold Wisconsin income tax from wages of Wisconsin residents employed in Minnesota. The Secretary of Revenue has authorized a special withholding arrangement for employers of Wisconsin residents working in Minnesota.
    3. Note: Minnesota employers who no longer have a withholding obligation for Wisconsin, should inactivate their Wisconsin withholding tax account.

      Questions?

      If you have questions about Wisconsin withholding tax, contact the Wisconsin Department of Revenue:

Last updated January 3, 2014