What Is Colorado Form DR 0104 and Why Does It Require License Info?
Learn how Colorado Form DR 0104 impacts tax filings, why it requests license details, and how to avoid common errors that could delay processing.
Colorado taxpayers must file Form DR 0104 to report state income taxes. This form determines tax liability or refund eligibility based on earnings, deductions, and credits. A unique requirement is providing license information, which can confuse some filers.
Filing Eligibility
Colorado residents and part-year residents must file Form DR 0104 if their income exceeds certain thresholds, which align with federal adjusted gross income (AGI) requirements. If a taxpayer files a federal return, they generally must file a state return. For 2024, single filers under 65 must file if their AGI exceeds $14,600, while married couples filing jointly must do so if their combined AGI surpasses $29,200.
Nonresidents with Colorado-sourced income must also file. This includes wages earned in the state, rental income from Colorado properties, or business income generated within its borders. Nonresidents must complete Form DR 0104PN to determine the portion of their income subject to state tax.
Income Categories
Colorado’s tax system starts with federal taxable income but includes state-specific adjustments that can increase or decrease the final taxable amount.
Wages, salaries, and tips are the most common sources of taxable income, reported from W-2 forms. Self-employment income requires additional reporting through Schedule C of the federal return, which carries over to the state filing. Business owners and independent contractors must also account for self-employment taxes, though Colorado does not impose additional levies beyond standard income tax.
Investment income, including interest, dividends, and capital gains, is taxed at the state’s flat rate of 4.40%. Unlike federal tax law, Colorado does not differentiate between short-term and long-term capital gains. Retirement income, such as Social Security benefits and pension distributions, may be partially excluded from taxation depending on the filer’s age and income level.
Credits and Subtractions
Colorado offers tax credits and subtractions to reduce tax liability.
The Earned Income Tax Credit (EITC) supplements the federal EITC for low- to moderate-income workers. Colorado’s version is 50% of the federal credit and is refundable, meaning taxpayers can receive a refund even if they owe no state tax. The Child Tax Credit (CTC) is also refundable and structured to provide greater benefits to lower-income families.
Contributions to Colorado’s 529 college savings plans are deductible, and qualified withdrawals remain tax-free. Contributions to Achieving a Better Life Experience (ABLE) accounts, which help individuals with disabilities save for qualified expenses, are also deductible.
Retirement income exclusions allow taxpayers over 65 to exclude up to $24,000 of qualifying retirement income, while those between 55 and 64 can exclude up to $20,000. This applies to distributions from pensions, 401(k)s, IRAs, and certain annuities. Military retirees receive a separate exemption, fully excluding military retirement pay from state taxes.
License Information Declaration
Colorado requires taxpayers to provide a driver’s license or state ID number when filing Form DR 0104 to prevent fraud and identity theft. The Department of Revenue cross-references this information with state databases to verify identity and reduce fraudulent refund claims.
The license information does not affect tax liability but serves as an authentication measure. Filers must ensure accuracy, as mismatched or expired credentials can cause processing delays. Those without a driver’s license or state ID can still file but may need additional verification.
Filing Errors and Delays
Errors on Form DR 0104 can lead to delays, rejected returns, or penalties for underpayment. Common mistakes include incorrect personal information, misreported income, and miscalculations on deductions and credits. Even minor discrepancies, such as a misspelled name or incorrect Social Security number, can result in a return being flagged for manual review.
Mathematical errors are another frequent issue, particularly for those filing paper returns. Tax preparation software helps reduce miscalculations, but manual filers should double-check their figures. Missing documentation, such as W-2s, 1099s, or supporting schedules for deductions and credits, can also delay processing. Taxpayers claiming subtractions or credits without proper documentation may be asked to provide additional proof, which can slow down refunds or lead to adjustments.