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Colorado Department of Revenue Issues Sample Required Notice of Tax Credits

By Community Manager posted 11-30-2023 04:35 PM

  

As we have previously written, under Colorado House Bill 23-1006, passed in spring 2023, employers will now be required to provide a notice of federal and state refundable income tax credits with the annual wage and tax statement (form W-2). The requirement starts with W-2s that will be issued in 2024 for tax year 2023.  

The Colorado Department of Revenue (DOR) has issued a sample notice to help employers fulfill this requirement. Identified as DR 0995, it provides sample language and some guidance for employers 

All employees who receive a W-2 must receive the notice, either electronically or in print. The language in the sample notice can be copied and pasted into another document, or employers can use the formatted notice provided in the sample’s second page. All language in the notice must be provideda URL for the DOR’s information on tax credits is not sufficient. There are minimum size requirements for a printed notice, as explained in the sample. 

For employers that use a third party to issue W-2s, Employers Council recommends having a clear understanding of who will issue the notice. As with W-2s, it does not matter who issues the notice, just that the employer fulfills its obligations. The state requires employers to annually provide employees with W-2s no later than January 31. 

In addition to issuing the new notice, the DOR has updated the Employee Withholding Certificate (DR 0004) and the Employer Withholding Worksheet (DR 1098). The employee form is optional to update, but Colorado employers must use the new form DR 1098 for pay periods on or after January 1, 2024. 

For employers that use the Internal Revenue Service’s (IRS’s) W-4 form for employee withholding alone without a DR 0004, a draft form W-4 for 2024 has been issued. However draft forms cannot be used. A final new W-4 form should be published in the next few months. 

For questions about Colorado withholding requirements, please see Tax.Colorado.gov/Withholding-Tax or email Employers Council. 


#Colorado
#EmployeeCommunication

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