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CCH® PAYROLL — 07/29/10

Minnesota discusses 2010 tax year changes for employers

The Minnesota Department of Revenue (DOR) has issued a notice addressing personal income tax withholding changes for employers for the 2010 tax year, including the termination of the Minnesota-Wisconsin income tax reciprocity agreement, the new Minnesota Form W-4MN (Minnesota Withholding Allowance/Exemption Certificate), requirements for electronically submitting W-2, W-2c, and 1099 forms, and the use of accounts associated with foreign banks when paying electronically.

The notice also reminds taxpayers that Minnesota has not yet conformed to provisions of the federal Patient Protection and Affordable Care Act of 2010 (P.L. 111-148), including the increase in the maximum allowable exemption from income for employer provided adoption expenses and the exclusion from gross income of an employee for employer-provided health insurance benefits. Until the Minnesota Legislature has had the opportunity to fully address adoption of the provisions, the Department of Revenue will not require employers to withhold taxes from those federally exempt employer provided benefits. However, since employees will be required to include those federally exempt benefits as income on their 2010 Minnesota income tax returns unless Minnesota law is changed, the employers are encouraged to share this information with affected employees so the employees can decide whether to elect additional withholding if they are concerned about having sufficient taxes withheld. (What's new for employers for tax year 2010?, Minnesota Department of Revenue, July 2010.)

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