Colorado’s economy is also dynamic with a number of booming sectors, and offers access to global markets. The state has a 4.4% individual income tax rate, and a 4.4% corporate income tax rate.
Understanding the cost of apportionment in the state can help you accurately report earnings to the IRS and local government.
Corporations
- Filing Requirements: If you have a Colorado S Corp, you must file a federal tax return. Note that this return will refer to what you put down on your federal tax return. As such, you should complete your federal return first. S Corps must file form 1120S with the IRS. As a pass-through entity, the company does not pay corporate tax on the income. Instead, the income is passed through to the shareholders, who must report the income on their personal taxes.
S Corps must also distribute 1120S Schedule K-1 to every shareholder. This shows your shareholders their portion of company profits, deductions and credits for use on their personal tax returns.
- Allocation and Apportionment. Colorado uses a single-sales factor rule to apportion receipts from the sale, lease, license, or rental of intangible property.
Partnerships
Filing Requirements. A partnership may file a composite income tax return for its nonresident partners, as a simplified way of paying the income tax owed by those partners. Each nonresident partner may elect to be included or excluded from the composite filling. Also note that a nonresident partner can elect to be excluded.
Employees & individual filers
You must file a Colorado income tax return if during the year you were a full-year resident or part-year resident of Colorado with taxable income during that part of the year. In addition, non-residents must report any income earned from Colorado sources, regardless of residency status.
Download our Multi-State Tax Filing Requirements Guide
Ensuring Accurate Tax Filing
Ensuring Accurate Tax Filings
Consulting an expert CPA can help you keep a handle on different laws and tax implications.
Fusion CPA has a team of certified public accountants who are highly skilled in handling multi state taxes. We’re positioned to help you take the stress out of tax season, so you can focus on what really matters.
To see how we can help you with a proactive tax strategy to save you time and money, schedule A Discovery Call with one of our CPAs.
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