You will need a Minnesota Tax ID Number and an active withholding tax account. Minnesota Withholding Tax is state income tax you as an employer take out of your employees' wages.Minnesota state tax withholding: Minnesota state tax withholding is optional. An online version of filling-out a paper form. Enter each employee's name, social security number, hours worked, wages, and the system calculates the tax due. To complete an enterable form on a computer: Download the Word document to your computer. Open your saved file and select the View tab in the upper left corner. Generally, only a nonresident alien individual may use the terms of a tax treaty to reduce or eliminate U.S. tax on certain types of income. This is the online version of filling out a paper form. Form 1099-R reports all taxable income you received from your MNDCP account and any state and federal taxes withheld.