Filing
A partnership or S corporation is required to ensure that its nonresident partners and shareholders file a Colorado income tax return to report their share of Colorado source income earned by the partnership or S corporation. This is accomplished in one of three ways:
- File a composite return on behalf of the nonresident partner/shareholder
- File a DR 0107 for each nonresident partner/shareholder. Each nonresident partner/shareholder will be responsible for filing thier own individual income tax return and payment.
- Withhold the current income tax rate of 4.63% from each nonresident partner/shareholder's Colorado source income. Submit payment with a DR 0108 for each nonresident partner/shareholder.
Nonresident partners and shareholders include nonresident individuals and nonresident estates or trusts.
A partnership or S corporation may file a composite return on Form 106 for its nonresident partners or shareholders as a simplified way of paying the income tax owed by those taxpayers. This replaces the preparation of a separate Colorado income tax return for each taxpayer. Each nonresident partner or shareholder may elect to be included or excluded from the composite filing. The tax paid will be 4.63% of the Colorado source income attributable to the partners/shareholders included in the composite return.
Returns are due three-and-one-half months after the close of the taxable year. A partnership or S Corporation is granted an automatic six-month extension of time for filing. If either of these dates fall on a weekend or holiday, the tax should be filed by the next business day.