Minnesota has reciprocity agreements with Michigan and North Dakota. You are not subject to Minnesota income tax if, in 2023:
- You were a full-year resident of Michigan or North Dakota and returned to your home state at least once a month
- Your only Minnesota income was from the performance of personal services (wages, salaries, tips, commissions, bonuses)
Do I need to file a nonresident return for the reciprocal state?
If a Minnesota resident erroneously had income tax withheld for a reciprocal state on salaries and wages earned there, a nonresident return for the reciprocal state will need to be filed to get a refund of the taxes withheld.
The credit for taxes paid to another state is automatically calculated in your account when you add a Nonresident return to your already created Resident Minnesota return.
If you qualify for the reciprocal agreement, you will need to remove the automatic calculation. To do so, log into your account and create the Minnesota Resident return. Then, after completing your Minnesota return entries, create a return for the nonresident reciprocal state.
What form do I need to complete if the other state is Michigan?
- State Section
- Edit Nonresident Michigan state return
- Residents of Reciprocal States
- Enter the Michigan income as a negative number
To claim exempt from future withholdings, file form MI-W4 with your employer.
What form do I need to complete if the other state is North Dakota?
- State Section
- Edit Nonresident North Dakota state return
- Basic Information
- Complete all that apply
For the School District- select No School District if you did not live in North Dakota at any time. To claim exempt from future withholdings, file form NDW-R with your employer.
NOTE: The nonresident returns will refund all or most of the taxes withheld. The resident return will calculate an amount owed (usually).
If your wages are covered by reciprocity and you do not want your employer to withhold Minnesota tax in the future, file Form MWR, Reciprocity Exemption/Affidavit of Residency, each year with your employer.