We are a Tx business with one employee working remotely from his home in CO. What steps do I take to for his CO state taxes?

Thank you for reaching out with your question about setting up state taxes for your remote employee in Colorado (CO), @TEbva. I understand you want to ensure payroll taxes are managed correctly in QuickBooks Desktop (QBDT) given the situation. I'm here to help guide you with the necessary steps to achieve this.

To handle remote employee taxes in Colorado (CO), you'll need to contact the CO state agency first to find details on which taxes apply and get hold of the following information to set up the new state and update your employee payroll profile in your QBDT:

• Account number(s)
• How often you're required to pay the tax (deposit frequency)
• Tax rates

See this guide to access CO state agencies' websites and contact them: Access state agency websites for payroll.

After obtaining them, update the employee’s profile in QBDT. You can follow these steps:

1. Go to the Employees, followed by Employee Center.
2. Double-click on the employee name, or right-click and select New employee if their name doesn't exist yet.
3. After entering or reviewing employee information, select the Payroll Info tab, and then, Taxes.
4. Click on the State tab.
   a. Since State Unemployment Insurance (SUI) is always based on where an employee is physically doing the work, even if they work from home, set the State Worked to CO.
   b. Set the State subject to withholding to CO for state income tax withholding.
5. You may see one or more prompts to set up new state taxes. Refer to Step 3 of this article for the process: Set up employees and payroll taxes in a new state.
   

    

If your employee is subject to any local taxes, these need to be set up as well.

1. While still in the Taxes setup under the Other tab, click inside the blank area below Item Name and select Add New.
2. Follow the wizard’s instructions to enter the account numbers and tax rates for applicable local taxes.
   

    

Finally, depending on your payroll service, you may need to sign authorization forms so QuickBooks can pay your state taxes and file your forms. If you use QBDT Payroll Assisted, you’ll receive an email with the authorization forms and instructions to sign. If you use QBDT Enhanced, you aren't required to sign authorization forms.

If you haven't created any paychecks for the employee yet, you can proceed with running the payroll since your employee info is updated. However, if you have already created paychecks, refer to this article for guidance: Edit, delete, or void employee paychecks.

I hope the information will guide you through setting up CO state taxes for your remote employee. Managing multistate payroll can be intricate, but with the right steps, you'll have it under control. If you need further assistance or have additional questions, feel free to click on the Reply button. We're committed to offering ongoing support.