By Payroll and Entitlements Editorial Staff
Colorado has issued a withholding worksheet. The Colorado Income Tax Withholding Worksheet prescribes the method for calculating Colorado income tax withholding and supplements the guidance provided in the Colorado Wage Withholding Tax Guide. Employers should continue to consult the Colorado Wage Withholding Tax Guide for information about wage withholding requirements, taxable and exempt wages, filing frequency, and W-2 wage and tax statements. The worksheet reflects the tax rate decrease to 4.55%.
Colorado income tax withholding is based on information reported by employees on the federal Employee’s Withholding Certificate, IRS Form W-4. There is no separate Colorado withholding certificate. The IRS made significant changes to Form W-4, which take effect January 1, 2020. Any employee who commences employment on or after January 1, 2020, must complete the new 2020 IRS Form W-4. For any employee who has completed a 2020 IRS Form W-4, the employer must calculate the required Colorado wage withholding using the newly issued Colorado worksheet.
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