New for 2022, the Colorado Department of Revenue (DOR) has created Form DR 0004, Colorado Employee Withholding Certificate, to help employees "fine-tune" their state withholding. The new form is optional for employees. However, beginning January 1, 2022, the form will be required for any new adjustments to Colorado withholding. Previously, there was no state form and the federal Form W-4, Employee’s Withholding Certificate, could be used to calculate state income tax withholding.
A DR 0004 Employee Resources webpage contains information for employees about how to fill out the form and where to submit it. There is also a DR 0004 FAQ webpage, with information for employers. The DOR also updated DR 1098, Colorado Withholding Worksheet for Employers, for 2022 and to reflect the new form.
If No State Form Is Submitted
If an employee does not submit Form DR 0004, their wage withholding should be calculated using the default values on the withholding worksheet based on the employee's federal Form W-4. Do not include any additional Colorado withholding.
If an employee does not submit a state form or a federal form, withholding should be calculated as if the employee submitted Form W-4 with a filing status of single with no other adjustments.
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Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for the APA.