AWC: Alternative Withholding Certificate (2024)
Minnesota · Minnesota DOR · Used for tax years 2024
Minnesota Form AWC, Alternative Withholding Certificate, lets nonresident individual partners and S corporation shareholders request reduced Minnesota income tax withholding for one tax year. It calculates the requested withholding using estimated Minnesota income, estimated tax
Who files this form
Use Form AWC if you are a nonresident individual partner or S corporation shareholder, expect at least $1,000 in Minnesota distributive income from that entity, and want the entity to withhold less than 9.85% of your Minnesota source distributive income.
You do not need this form if you choose to have 9.85% withheld or to be included in composite income tax.
The withholding requirement described in the form applies to partnerships and S corporations that are not making a pass-through entity (PTE) tax election, for nonresident individuals who are not included in composite income tax and have Minnesota distributive income of $1,000 or more.
What you'll need
Have the following information available:
- Your name, Social Security number, address, and daytime phone number.
- Your estimated Minnesota distributive income from the partnership or S corporation and estimated total Minnesota taxable income for the tax year.
- The amount of Minnesota individual estimated tax you paid for the year.
- Forms W-2 or W-2P showing Minnesota income tax withheld from other income.
- Schedules KS or KPI showing applicable Minnesota credits on lines 23 through 25 and 27 through 32, and Minnesota backup withholding credit on line 34.
The partnership or S corporation must enter its name and federal and Minnesota tax ID numbers.
How to file
- On line 1, enter the smaller of your estimated Minnesota distributive income from this entity or your estimated total Minnesota taxable income for the tax year.
- Multiply line 1 by 9.85% (.0985) and enter the result on line 2.
- Enter Minnesota estimated tax paid on line 3, Minnesota tax withheld from other income on line 4, and the specified Minnesota credits and backup withholding on line 5.
- Add lines 3, 4, and 5 on line 6. Subtract line 6 from line 2 and enter the result on line 7. If the result is zero or less, enter 0. Line 7 is the amount you request to be withheld.
- Sign and date the certificate. Give the original to the partnership or S corporation before the end of its tax year.
The entity completes its identifying information and includes a copy of each AWC with its original Form M3 or M8 return by the return's due date.
Do not send Form AWC directly to the Department of Revenue or file it with your Form M1. To claim the amount withheld, file Form M1 and include the Schedule KPI or KS you receive from the entity.
Common mistakes
- Using AWC for wage withholding. The instructions say not to use this form for that purpose.
- Reusing a certificate for another year. It is effective for only one tax year. Complete a new certificate each year you wish to change the amount withheld.
- Sending AWC to the wrong place. Give it to the partnership or S corporation, not directly to the Department of Revenue or with Form M1.
- Forgetting to sign and date it. The partner or shareholder must complete, sign, and date the certificate.
- Submitting false information. If the certificate is found to be false, the Department of Revenue may require maximum-percentage withholding in future years, even if you submit Form AWC.
Questions people ask
Why might I qualify for less withholding?
You may owe less Minnesota tax because you paid Minnesota estimated tax, had Minnesota tax withheld from wages, or have losses from other Minnesota sources that reduce your Minnesota taxable income below the distributive income from this entity.
Does one certificate cover multiple years?
No. Form AWC is effective for one tax year. Complete a new form each year you wish to change the amount withheld by the partnership or S corporation.
What if my line 7 calculation is negative?
Enter 0 if line 2 minus line 6 is zero or less.
How do I claim the tax the entity withheld?
File Form M1 and include the Schedule KPI or KS you receive from the partnership or S corporation. Do not include Form AWC with Form M1.