The below content should be reviewed in conjunction with the in-depth federal coverage of this topic provided above.

Authors: Sarah Benjes, Stuart R. Buttrick, Susan W. Kline and Mary L. Will, Faegre Baker Daniels LLP

Summary

  • Employers must withhold Colorado income tax from employee compensation if the compensation is subject to federal income tax withholding and the employee is a Colorado resident, or is a nonresident of Colorado performing services in Colorado. Certain nonresident motion picture and television production employees and nonresidents who work sporadically in Colorado are exempt from Colorado income tax withholding. See Withholding on Residents and Nonresidents.
  • Colorado employers determine withholding using federal Form W-4, Employee's Withholding Allowance Certificate. See Employee's Withholding Allowance Certificate.
  • The withholding rate on supplemental wage payments, such as bonuses, is calculated differently depending on when the supplemental wage payments are made. See Supplemental Wages.
  • Each year, employers must provide copies of federal Form W-2, Wage and Tax Statement, to each employee from whom any amount of Colorado income tax was withheld, or would have been withheld under the approved tables and other methods if the employee had claimed no more than one withholding allowance. See Form W-2 Reporting Requirements.
  • Employers are required to keep records of wages paid and taxes withheld for a certain number of years. See Recordkeeping Requirements.
  • In addition to withholding state income taxes from employees' pay, employers in Colorado must also withhold for local payroll taxes collected by five cities. See Local Payroll Taxes.