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11/05/2021Colorado Withholding Certificate DR 0004:
Information and Resources
What is form DR 0004?
Form DR 0004 is the new Colorado withholding certificate that is optional for employees to complete starting in 2022. It is not meant to replace form W-4 for Colorado withholding, but is meant to help employees in a few specific situations who may want to fine-tune their Colorado withholding. If an employee asks about adjusting their withholding, the employer is required to provide form DR 0004 to them.
How does form DR 0004 change the Colorado withholding calculation?
The Colorado Withholding Worksheet for Employers (DR 1098) prescribes the calculation employers are required to use. It has been updated with directions for entering the amounts from form DR 0004 into the existing calculation steps.
- If an employee completes form DR 0004, the employer is required to calculate their Colorado withholding using the amounts entered on that DR 0004, as prescribed in the DR 1098 worksheet.
- If an employee does not complete form DR 0004, the employer is required to calculate their Colorado withholding using the amounts prescribed in the DR 1098 worksheet based on their IRS form W-4.
Reasons an employee may want to complete form DR 0004:
- They earn most of their income from one job
- They expect significant income from sources that will not have withholding
- They expect to claim federal itemized deductions
- They expect to claim the new Colorado child tax credit
Reasons an employee may want to complete a new Federal W-4 and/or Colorado DR 0004:
- Withholding certificate was last updated 3 or more years ago
- Wages or other income changes significantly
- Number of jobs changes
- Filing status changes (single, married filing joint, etc.)
- Federal deductions change significantly
- Colorado child tax credit qualifications change
The Department is working on updates to the Wage Withholding Tax Guide and Rule 39-22-604 for withholding. To sign up for the Department’s rulemaking notifications, see the link at the bottom of Tax.Colorado.gov/Tax-Rules.
Additional Information
