Payroll Close to the Minnesota Line
Brookings employers draw on three very different labour pools: college students who work part time around their classes, skilled and semi-skilled workers in the city's plants and processors, and people who commute from small towns in Brookings County and across the line in Minnesota. South Dakota has no income tax to withhold, so payroll for a Brookings employee working in Brookings is relatively simple. Payroll for a Minnesota resident, an international student or an employee sent to a Minnesota job site is not. BOMCAS runs payroll for Brookings employers remotely, including the Minnesota side when it applies.
The South Dakota payroll page explains statewide employer accounts and reporting. This page looks at student staff, farm workers and employees connected to Minnesota.
The South Dakota Basics
- No state income tax withholding for work done in South Dakota.
- Reemployment assistance contributions and quarterly wage reports to the Department of Labor and Regulation.
- New-hire reporting for every new or rehired employee, which adds up quickly with student turnover each semester.
- Workers' compensation through a private carrier.
- The state minimum wage, adjusted each January, with a tipped cash wage of half that amount.
Student Employees
Restaurants, retailers, gyms and offices in Brookings employ many SDSU students. Their payroll is like anyone else's for federal purposes: the student FICA exemption applies only when a student works for the school where they are enrolled, so a private Brookings employer withholds Social Security and Medicare as usual. Students often claim exemption from federal income tax withholding on Form W-4 when they expect no tax liability, and that claim has to be renewed each year. Scheduling around exams and breaks produces irregular hours, so we check that overtime is calculated correctly when a student works extra shifts during busy weeks.
International students and graduates
International students on F-1 visas can work in limited roles, including curricular practical training and optional practical training after graduation, which many Brookings engineering and technology employers use. F-1 and J-1 students who are nonresident aliens are generally exempt from Social Security and Medicare on wages for work allowed by their visa, usually for their first five calendar years in the United States. Federal income tax is withheld under special nonresident rules, and a tax treaty may exempt some wages. We check each worker's status before the first payroll.
Manufacturing and Processing Payroll
Plants and processors run multiple shifts, pay shift differentials and production bonuses, and use a lot of overtime at peak times. Shift differentials and nondiscretionary bonuses must be included in the regular rate when calculating overtime, a common error. Overtime records also matter for employees, because the federal deduction for qualified overtime pay for 2025 through 2028 depends on the overtime premium shown by the employer.
Farm and Dairy Payroll
Farms and dairies in Brookings County follow different payroll rules. Farm wages are reported on Form 943 rather than Form 941, and Social Security and Medicare apply to a farm worker who earns $150 or more in the year or whose employer pays total farm wages of $2,500 or more. Housing or meals provided on the farm may be excluded from wages if they are provided for the employer's convenience, and federal unemployment tax applies to farm employers only above certain payroll or headcount thresholds.
Employees Who Live in Minnesota
Minnesota taxes its residents on all their wages, wherever they work. A Brookings employer is not required to withhold Minnesota tax for a Minnesota resident who works only in South Dakota, but many employees ask for voluntary withholding so they do not owe a large balance in April. We can set that up if the employer is able to register with Minnesota for withholding.
Employees Who Work in Minnesota
When a Brookings employee works on jobs in Minnesota, the employer generally must register with the Minnesota Department of Revenue and withhold Minnesota tax on the Minnesota wages. Unemployment insurance usually belongs to the state where the employee's work is based. Minnesota Paid Leave, which began paying benefits in 2026, applies to employees who do at least half of their work in Minnesota, wherever the employer is located. The 2026 premium is 0.88 percent of wages up to the Social Security wage base, and the employer can deduct up to half from the employee. Minnesota also requires earned sick and safe time for employees who work there for at least 80 hours a year.
Federal Payroll Duties
- Withholding and deposits of federal income tax, Social Security and Medicare.
- Form 941 each quarter, Form 943 for farm workers, and Form 940 each year.
- Forms W-2 and W-3 in January, and 1099-NEC for contractors.
- Reporting that supports the federal overtime and tip deductions.
What You Receive
Each pay run includes a register, employee pay stubs, and deposit and filing confirmations for every jurisdiction involved. We prepare quarterly and annual filings on schedule, and you approve each payroll before it is paid.
Brookings Payroll Questions
Do I withhold Social Security from SDSU students who work for me?
Yes, if you are a private employer. The student FICA exemption only applies to students employed by their own school. International students on F-1 or J-1 visas who are nonresident aliens are generally exempt.
My employee lives in Minnesota. Must I withhold Minnesota tax?
Not if they work only in South Dakota, but they owe Minnesota tax on the wages, so many ask for voluntary withholding. If they work in Minnesota, you generally must withhold Minnesota tax on those wages.
Does Minnesota Paid Leave apply to a Brookings employer?
It applies to employees who do at least half of their work in Minnesota, regardless of where the employer is based. The 2026 premium is 0.88 percent of covered wages.
How is farm payroll different?
Farm wages are reported on Form 943, and Social Security and Medicare apply under special farm thresholds. Housing and meals on the farm may also be excluded from wages in some cases.
Talk to BOMCAS About Payroll in Brookings
Payroll entries need to reconcile with the general ledger and support the business return. Salary decisions for owners belong in tax planning. Missing quarterly filings can be addressed through late-filing help, and employees can ask about their own returns. Hiring Canadian staff raises cross-border questions, and businesses selling taxable services should keep sales tax current. Statewide context for other services is available in our South Dakota guides to business tax returns, individual returns, sales and use tax, bookkeeping, tax planning, late filing and cross-border tax, plus the South Dakota overview.
Share a few details about your Brookings situation, and BOMCAS will reply with practical next steps and the information needed for a quote. Use the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. To compare services, return to the Brookings overview. This information is general and does not replace advice for your specific facts.