Tax & Accounting Blog

Minnesota, North Dakota, Wisconsin: Income Tax Changes Affect Retirement and IRA Distributions

1099, ONESOURCE, Tax Information Reporting July 31, 2013

5784Minnesota, North Dakota and Wisconsin have enacted personal income tax rate and bracket changes that are retroactive to January 1, 2013. Withholding on qualified retirement plan and IRA distributions is voluntary for all three states, but where the payer withholds, the withholding tables or formula method are used to determine the amount for Minnesota and North Dakota, and for Wisconsin the amount is determined according to the withholding tables or is an amount designated by the individual taxpayer. Minnesota legislation created a new tax bracket, and new withholding tables and withholding formula instructions have been issued. The Minnesota Department of Revenue advises payers to put the new withholding tables or formula into use immediately, noting that the tables do not incorporate any “catch up” extra withholding for January 1 to the present. North Dakota legislation reduced the income tax rates for individuals, and new withholding tables and percentage method withholding instructions have been issued. The North Dakota Tax Commission announced that updating withholding systems to reflect the changes is optional for the remainder of the 2013 calendar year; however, payers are encouraged to update their systems as soon as they are able to do so. Payers that choose to update their payroll systems for the remainder of the 2013 calendar year are not required to make any adjustment to North Dakota income tax withholding returns already filed, or to payments already issued, or to future payments in 2013. Wisconsin legislation made changes in the income tax rates and brackets, and new withholding tables are expected to be issued but had not yet been issued by the Department of Revenue as of July 1.

Editor’s notes:
Marianne Couch has authored a number of blog posts on tax information reporting, trust tax, and FATCA topics. Visit her archives page to view all of her posts.

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