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WFR Colorado Legislation Update 2022

Support for new Colorado Form DR 0004

For 2022, Colorado has created their own state-specific employee withholding form: the DR 0004 (previously, Colorado used the Federal Form W-4). This form is optional in 2022.

To accommodate this new form, a new miscellaneous state parameter for the Colorado State Tax has been added to the
engine: ANNUAL_WITHHOLDING_ALLOWANCE. This new parameter has an effective date of 1 January 2022 and will not function for prior payroll dates.

This parameter corresponds to the “Annual Withholding Allowance” dollar amount from line 2 of the Form DR 0004.

  • If this new parameter is not set, or it is set to 0: the STE will use the previous behavior of subtracting $8,000 if the
    employee is married filing jointly or is a qualifying widow(er) (FILINGSTATUS = ‘M’) or subtracting $4,000 for all other
    filing statuses.
  • If this new parameter has a value set: the STE will deduct that amount instead of the $8,000/$4,000 amount based on the employee’s filing status

This logic corresponds to Step 2a in the calculation instructions from the DR 1098:

“2a. If the employee completed form DR 0004 Line 2, enter that amount. If the employee did not submit form DR 0004, or if form DR 0004 Line 2 is blank, enter the appropriate amount based on the employee’s expected filing status from IRS form W-4 Step 1(c): $8,000 if married filing jointly or qualifying widow(er); or $4,000 otherwise.”

Note: Employees may also designate “Additional Withholding Per Pay Period” on line 3 of the DR 0004. This corresponds to the “additionalWH” default parameter that is available when setting up the tax (i.e., not a miscellaneous parameter). This is pre-existing functionality – on the original Form W-4, it instead corresponded to Step 4(c), “Extra Withholding.”

DR 0004:
DR 1098:

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