What is form DR 0004?
Form DR 0004 is the Colorado Employee Withholding Certificate that is available for Colorado Taxpayers. It is not meant to completely replace IRS form W-4 for Colorado withholding, but to help employees in a few specific situations fine-tune their Colorado withholding.
- If an employee asks about adjusting their withholding, you are required to provide form DR 0004 to them.
- An employee is not required to complete form DR 0004.
How does form DR 0004 change the Colorado withholding calculation?
The Colorado Withholding Worksheet for Employers (DR 1098) has been updated with directions for entering the amounts from form DR 0004 into the existing calculation steps.
- If an employee gives you a completed DR 0004, you are required to calculate their Colorado withholding using the amounts entered on their DR 0004, as prescribed in the DR 1098 worksheet.
- If an employee does not complete form DR 0004, you are required to calculate their Colorado withholding using the amounts prescribed in the DR 1098 worksheet based on their IRS form W-4.
When am I required to start using the new Colorado withholding calculation?
Beginning in 2021, employers were required to transition to using the wage withholding calculation method prescribed by the Department of Revenue on the DR 1098 Withholding Worksheet, based on the employee’s IRS form W-4.
Beginning in 2022, form DR 0004 is available for employees to adjust their Colorado withholding. If an employee gives you a completed DR 0004, it will determine two of the amounts you enter into the DR 1098 calculation.