DR 0205: Tax Year Ending Computation of Penalty Due Based on Underpayment of Corporate Estimated Income Tax (2024)
Colorado · Colorado DOR · Used for tax years 2024
Colorado Form DR 0205 calculates the penalty due for underpayment of corporate estimated income tax. It determines the required annual payment and any estimated tax penalty and should be included with the corporation's completed Form DR 0112.
Who files this form
Corporations use DR 0205 to compute the penalty for underpaying Colorado corporate estimated income tax. Generally, a penalty applies if current-year estimated tax payments are not made on time.
The form states that no estimated tax penalty will be assessed if the Colorado tax liability is less than $5,000. Include DR 0205 with your completed DR 0112.
When it's due
For tax year 2024, enter the quarterly estimated payment due dates on line 10: the 15th day of the fourth, sixth, ninth, and twelfth months of the taxable year.
Corporations filing for a short tax year must adjust lines 9, 10, and 11 accordingly. The supplied text does not print a separate filing deadline for DR 0205.
What you'll need
Have these records and details available to complete the form:
- Corporation name and Colorado Account Number (CAN).
- Current-year Colorado tax liability, including credit recapture, after all credits except estimated tax and withholding tax payments.
- Previous-year Colorado tax liability calculated on the same basis, and whether a Colorado return was filed for that year.
- Estimated tax and withholding payment amounts, plus payment dates.
- Whether the corporation qualifies as a large corporation under section 6655 of the federal IRS code.
- Your completed DR 0112, which must include DR 0205.
If using the annualized installment method, you also need the ending dates of the annualization periods and Colorado taxable income through each date.
How to file
Include DR 0205 with your completed DR 0112. Enter the total penalty from DR 0205, line 22, on DR 0112, line 48.
The supplied text does not give a mailing address or e-file instructions. It directs taxpayers to Tax.Colorado.gov for additional information about the estimated tax penalty.
Common mistakes
- Moving between columns too soon: Complete each column in Part 3 before going to the next column.
- Using prior-year tax without meeting the conditions: The prior-year option requires a 12-month preceding tax year, a filed Colorado return, and a corporation that is not a large corporation. Large corporations have a limited first-quarter exception.
- Skipping large-corporation adjustments: Large corporations must complete line 11 using line 9 or, when using the annualized installment method, line 29. Any first-quarter underpayment caused by using prior-year tax must be paid with the second quarterly payment.
- Ignoring a short tax year: Adjust lines 9, 10, and 11 accordingly.
- Leaving out the attachment or penalty total: Include DR 0205 with DR 0112 and carry the total penalty to DR 0112, line 48.
Questions people ask
How is the required annual payment calculated?
Generally, it is the smaller of 70% of actual net Colorado tax liability or 100% of the preceding year's Colorado tax liability. The prior-year option applies only if that year was a 12-month tax year, the corporation filed a Colorado return, and the corporation is not a large corporation under section 6655 of the federal IRS code.
What if the corporation did not file a previous-year Colorado return?
Enter the amount from line 5 on both line 6 and line 7. Line 5 is 70% of the current-year tax liability entered on line 4.
Can a corporation with uneven income use annualized installments?
Yes, if it elected annualized installments or adjusted seasonal installments for its federal income tax payments. Complete Part 4 to calculate the amounts to enter on line 11.
Which penalty rates does this form use?
Lines 18 and 21 use 11% for dates in 2024 and 12% for dates in 2025. The calculation multiplies the underpayment by the applicable rate and number of days, then divides by 365, or 366 for a leap year.