Withholding Tax Information For Wisconsin Residents Employed in Another State

With the end of the income tax reciprocity agreement between Minnesota and Wisconsin, some employers (those who have nexus in both Wisconsin and Minnesota) will find that they are required to withhold both Wisconsin and Minnesota income tax from the wages of Wisconsin residents. This could cause problems for those Wisconsin residents who, when they file their Wisconsin income tax return, will be eligible for a credit for tax paid to Minnesota and, as a result, will have had too much Wisconsin tax withheld.

There are two methods employees can use to decrease their Wisconsin withholding if they determine that they will be over withheld when filing their Wisconsin income tax returns.

The first is to determine if the Wisconsin withholding can be reduced a sufficient amount by claiming the maximum number of exemptions allowed on Wisconsin Form WT-4, Employee's Wisconsin Withholding Exemption Certificate. If an employee is not claiming the maximum number of exemptions allowed, he/she may decrease the withholding by filing a new Form WT-4 with the employer and claiming an increased number of exemptions. If an employee is claiming the maximum number of exemptions allowed and withholding is still more than the employee's estimated net tax liability for the year, the employee should then file Form WT-4A.

Form WT-4A, Wisconsin Employee Withholding Agreement, may be filed by an employee who determines that the amount withheld from his or her wages will be more than the employee's estimated net tax liability for the year. Form WT-4A is an agreement between the employee and employer that a lesser amount will be withheld from the employee's wages than is provided for in the Wisconsin income tax withholding tables. A worksheet is included on the Form WT-4A to determine the estimated net tax liability for the year and the amount that should be withheld.

Form WT-4A must be filed yearly with the employer and the Department of Revenue. For example, the 2010 Form WT-4A expires on April 15, 2011. The employee must then file a 2011 Form WT-4A if he/she wants to adjust withholding for 2011.

Copies of Forms WT-4 and WT-4A are available from the department's website at: www.revenue.wi.gov/forms/with/index.html.

Last updated December 21, 2009