Colorado imposes on its residents and any others who have income from a Colorado source a state income tax. State income tax is governed by the Department of Revenue of individual states and is separate from the federal income tax imposed by the Internal Revenue Service (IRS), which means a separate income tax return must be filed for Colorado state income tax.
Below is genera information about Colorado state income tax.
You must file a state income tax return for Colorado if any of the following are true:
- You are a resident of Colorado for the entire year
- You are a resident of Colorado for part of the year and your income exceeds the minimal taxable amount
- You are a non-resident of Colorado but receive income from sources based in Colorado and must file a federal income tax return
- You are a non-resident of Colorado but receive income from sources based in Colorado and have a Colorado income tax liability
In addition, if you are resident of Colorado and you file a federal income tax return, you should file a state income tax return for Colorado. Otherwise, the Department of Revenue may file a return on your behalf that does not take into account all the deductions and other items that minimize your tax liability.
Finally, if you believe you are due a refund, including because income was withheld from your wages but you did not earn more than the minimum taxable, then you must file a state income tax return to receive that refund.
Colorado uses a flat tax rate of 4.63% for state income tax purposes, as opposed to a marginal tax rate that increase as you earn more income.
If you must complete a state income tax return for Colorado, your return should be filed and any tax due must be paid by April 15. If April 15 falls on a holiday or weekend, the filing date for the tax return will be the first non-holiday business day.
If you need additional time to complete your state income tax return, you are granted a six-month extension automatically by simply not filing your return. However, if you owe any tax, you must still pay that amount by the original date of April 15 or you will be subject to interest and penalties on the unpaid balance. If you can pay at least 90% of the tax liability you owe by April 15, you will not be charged a penalty but only interest on the unpaid tax balance.
The penalty for an unpaid tax balance is 5 percent of the balance due for the first month and then an additional .5 percent for each additional month, up to a maximum of 12%. The interest on an unpaid tax balance is based on the prime interest rate in July of the year before the current tax year.
Tax Preparation Assistance
The information above is general in nature and is subject to change. Therefore, if you need help preparing your state income tax return or getting answers to questions, you should speak with a tax attorney who is familiar with Colorado state income tax law.
- New York State Income Tax Overview (taxlawhome.com)
- Illinois State Income Tax Overview (taxlawhome.com)
- Virginia State Income Tax Overview (taxlawhome.com)
- New Jersey State Income Tax Overview (taxlawhome.com)
- Indiana State Income Tax Overview (taxlawhome.com)
Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.