Hi,
I moved to Colorado from California in 2020. I am retired from the State of California. In California, my state withholding tax was taken out of my monthly retirement check before it was sent to me by my retirement system. They do not perform this service for withholding from any other state beside California. Does anyone know how I would go about paying withholding tax from an out of state retirement account, reported on a 1099-R to the Colorado Department of Revenue? Thanks for any help you can provide. I have already been on hold with the Department of Revenue for half an hour.....
Debbie S.
When withholding is not possible ... you pay quarterly state estimated payments instead. https://tax.colorado.gov/individual-income-tax-estimated-payments
Q. How I would go about paying withholding tax from an out of state retirement account, reported on a 1099-R to the Colorado Department of Revenue?
A. There is no way to do that. As Critter-3 said, you make "quarterly estimated tax payments", instead.
The only way to have "withholding" done is to ask the payor (retirement system) to do it. In your case, they've said no.
Another alternative is to increase the state withholding on any other income you have. For example, social security.
Note that you do not make quarterly estimated tax payments for each individual piece of income (e.g. your pension payment), but for any withholding shortfall on your total income.
There will be no underpayment penalty, on Colorado income tax, if the required annual amount to be paid (withholding + estimates) is the lesser of:
• 70% of actual current year net Colorado tax liability, or
• 100% of preceding year’s net Colorado tax liability
Reference: https://tax.colorado.gov/sites/tax/files/DR0204_2020.pdf