How to Pay Estimated Taxes in Minnesota

Freelancers, independent contractors, and business owners in Minnesota must make estimated tax payments throughout the year. Unlike traditional employees, they do not have taxes withheld from their earnings and must proactively send payments to avoid a large bill at tax time.

Calculating Estimated Liability

Minnesota requires individuals expecting to owe $500 or more in state income tax after credits and withholding to make estimated payments. The amount is based on projected taxable income, deductions, and credits. Taxpayers typically start with their federal adjusted gross income (AGI) and adjust it according to Minnesota’s tax laws.

The state’s progressive income tax rates range from 5.35% to 9.85% in 2024. A single filer with taxable income up to $31,230 pays 5.35%, while income exceeding $193,240 falls under the highest bracket. Minnesota does not conform to all federal deductions, so adjustments may be necessary.

Self-employed individuals must also consider how Minnesota treats business income. While the state follows federal self-employment tax deductions, pass-through entities like S corporations and partnerships may elect to pay tax at the entity level. Reviewing Minnesota Schedule M1M ensures proper income adjustments.

Payment Methods

Minnesota taxpayers can submit estimated tax payments electronically, by mail, or through automated withdrawals.

Online Payment

The Minnesota Department of Revenue’s e-Services system allows individuals to make payments online at [www.revenue.state.mn.us](https://www.revenue.state.mn.us). Payments can be made via direct bank transfer (ACH debit) or credit/debit card. ACH payments are free, while card transactions incur a processing fee.

To use e-Services, taxpayers need their Social Security number or Individual Taxpayer Identification Number (ITIN), the tax year, and the payment amount. A confirmation number is generated upon submission and should be saved for records. Payments typically process within one to two business days.

Mail Payment

Taxpayers paying by check or money order must complete Form M14, the Estimated Tax Payment Voucher, and include it with their payment.

Payments should be made payable to the “Minnesota Department of Revenue” and include the taxpayer’s Social Security number and tax year on the memo line. They should be mailed to:

Minnesota Department of Revenue
PO Box 64058
St. Paul, MN 55164-0058

To ensure timely processing, payments should be postmarked by the due date. Using certified mail or requesting a return receipt provides proof of submission.

Automated Withdrawals

Taxpayers can schedule automatic withdrawals through e-Services under the “Schedule Payments” option. This allows payments to be deducted on specific dates, reducing the risk of late payments.

To enroll, individuals must provide their bank routing and account numbers, along with payment amounts and dates. Changes or cancellations must be made at least one business day before the scheduled withdrawal. This method is useful for those with consistent income who want to automate compliance.

Payment Deadlines

Minnesota follows a quarterly schedule for estimated tax payments, aligning with IRS due dates: April 15, June 15, September 15, and January 15 of the following year. If a due date falls on a weekend or holiday, the deadline moves to the next business day. Late payments can result in penalties and interest charges.

Taxpayers with fluctuating income may benefit from the annualized income installment method, which adjusts estimated tax amounts each quarter based on earnings. Filing Minnesota Schedule M15 allows for more accurate calculations and may help reduce underpayment penalties.

For those expecting significant changes in income, deductions, or credits, revisiting estimated tax calculations periodically prevents overpayment or underpayment. Adjustments can be made before the next deadline to reflect updated financial projections.

Record Keeping and Documentation

Maintaining records of estimated tax payments is essential for compliance and financial planning. The Minnesota Department of Revenue does not issue formal receipts for mailed payments, so taxpayers should retain copies of checks, bank statements, or money order receipts. For electronic payments, transaction confirmations should be saved digitally or printed.

Organized records simplify tax return preparation. Keeping track of amounts paid, dates, and payment methods ensures accuracy when filing Form M1, the Minnesota Individual Income Tax Return. A spreadsheet or accounting software can help manage these details.

If an overpayment occurs, well-documented records make it easier to apply the excess amount toward future estimated taxes or request a refund. Without clear documentation, taxpayers may struggle to substantiate claims for credits on subsequent returns.

Potential Penalties for Underpayment

Failing to pay enough in estimated taxes can result in penalties and interest charges. Minnesota generally requires taxpayers to pay at least 90% of the current year’s total tax liability or 100% of the prior year’s tax liability, whichever is lower. If payments fall short, the state calculates a penalty based on the unpaid balance and the number of days past the due date.

Interest accrues daily on any unpaid tax balance, starting from the original due date until fully paid. The interest rate is adjusted annually and is based on the federal short-term rate plus 3%.

Taxpayers with fluctuating income can use Form M15 to annualize income and potentially reduce penalties by demonstrating that payments were made in proportion to earnings throughout the year.