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Withholding Tax Filing Requirements

Employers

You must withhold Colorado income tax from any compensation paid to any employee if:  

  1. The compensation is subject to federal withholding for income tax purposes, and
  2. The employee is a Colorado resident (whether working inside or outside of Colorado), or the employee is a nonresident of Colorado performing services in Colorado.

Instructions can be found in the Colorado Income Tax Withholding Worksheet for Employers (DR 1098), which prescribes the method for employers to calculate the required Colorado wage withholding. This calculation is based on an employee’s withholding certificate, which is either IRS form W-4 or Colorado form DR 0004. A new employee must submit the current version of form W-4, which is available at IRS.gov.

1099 Issuers

Entities that withhold from amounts paid and reported on a form 1099 must set up a separate tax account with the Department of Revenue to pay the withholding. Examples of these entities are:

  • Brokerage companies
  • Financial institutions
  • Government agencies
  • Pension organizations
  • Property management companies

Gaming Establishments

Entities that withhold from amounts paid and reported on a form W-2G must set up a separate tax account with the Department of Revenue to pay the withholding. Examples of these entities are:

  • Casinos
  • Bingo halls
  • Race tracks

What if no tax is due for a filing period?

A tax return must be filed even if the tax due is zero. When no return is filed, the department considers that to be a "non-filer" situation. When you don't file a return, you will receive non-filer billing notices by mail. For more information, visit the No Withholding Tax Collected web page.