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Use the 2023 Colorado Employee Withholding Certificate

by Intuit Updated 7 months ago

Learn how to use the 2023 CO Withholding Form DR 0004 in QuickBooks Online and Desktop Payroll products.

The Colorado Department of Revenue introduced Form DR 0004 for 2022.  Your Colorado employees can use this form to adjust their state income tax to better meet their specific tax situation. 

Form DR 0004 is optional for your employees. If they don’t use it, their Colorado wage withholding will be calculated using IRS Form W-4 default standard deduction as determined by the IRS W-4 Step 1(c).

Here are some helpful resources for you and your employees to learn more about this form:

Set up your employees

To add the 2023 Colorado withholding certificate calculations to your employee profiles, select your product below.

Note: Not sure which payroll service you have? Here's how to find your payroll service.

You’ll need a 2020 Federal W-4 form from your employees to use the CO DR 0004 Form.  If your employee used a 2019 or prior Federal W-4, they’ll need to complete the 2020 Federal W-4 Form.

  1. Get the 2020 Federal W-4 Form and the CO DR 0004 Form from your employee. Sign in to QuickBooks Online.
  2. Go to Payroll, then select Employees (Take me there).
  3. Select your employee.
  4. From Tax withholding, select Edit.
  5. Select 2020 or later (if this prompt appears). 
  6. Enter the info from your employee’s 2020 Federal W-4 form and CO DR 0004. Line 2 info should be added to the DR 0004 Annual Allowance field. 

CO DR0004 Effect: Any amount entered on line 2 will replace the standard basic deduction amount being used to calculate ‌CO state income tax withholding. If your employee left line 2 blank, this will assume the employee wants to use the Standard Deduction amount for their CO filing status in calculating their state income tax. You shouldn't enter a $0.00 dollar value. 

  1. Select Employees, and then select Employee Center
  2. Double-click the employee you want to change (or select Add new employee if you hired a new employee).
  3. Select Payroll Info, and then select Taxes.
  4. Select the State tab.
  5. From the Withholding Certificate , choose the CO DR 0004 option. 
  6. In DR 0004 Annual Allowance, enter the amount your employee provided in Box 2 on the DR 0004. If you leave this blank or enter 0, we’ll use the default standard deduction of $8,000 (married filing jointly) or $4,000 (otherwise), as determined by the IRS W-4 Step 1(c).
  7. Select OK twice.
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