Part 5: Income Tax Withholding

Colorado law requires the payer of certain types of income to withhold Colorado income tax. This Part 5 discusses the types of income that are subject to Colorado income tax withholding. For those types of income, the payer must do all of the following:

withhold the prescribed amount of income tax from any payment made to the recipient;

remit the income tax withholding to the Department; and

issue a statement (such as IRS Form W-2 or 1099) to the recipient indicating the amount of tax withheld.

The taxpayer may then claim the withholding, when they file their Colorado income tax return, as a credit against the due. To the extent the income tax withheld exceeds the tax due, the taxpayer may either claim a refund for the excess or carry forward the excess as a credit toward estimated tax due for the following tax year.