DR 0205: Tax Year Ending Computation of Penalty Due Based on Underpayment of Corporate Estimated Income Tax (2025)
Colorado · Colorado DOR · Used for tax years 2025
Colorado Form DR 0205 calculates the penalty due for underpayment of corporate estimated income tax. It determines the required annual payment and whether an exception applies, and should be included with the completed DR 0112.
Who files this form
DR 0205 computes the penalty for underpayment of Colorado corporate estimated income tax. Generally, a corporation is subject to an estimated tax penalty if its current-year estimated tax payments are not paid on time.
No estimated tax penalty will be assessed if the Colorado tax liability is less than $5,000. The form says to include DR 0205 with your completed DR 0112.
When it's due
For tax year 2025, enter these quarterly 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 the dates on line 10 accordingly.
What you'll need
Have your completed DR 0112 and the information needed for DR 0205:
- Corporation name and Colorado Account Number (CAN).
- Current-year Colorado tax liability, including credit recapture, after all credits other than estimated tax and withholding tax payments.
- Previous-year Colorado tax liability, calculated on the same basis, if you filed a previous-year Colorado return.
- Estimated and withholding tax payment amounts and payment dates.
- If using the annualized installment method, Colorado taxable income through each annualization period's ending 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 51, as the estimated tax penalty.
The supplied text does not give a mailing address or e-filing instructions. It directs taxpayers to Tax.Colorado.gov for additional information about the estimated tax penalty.
Common mistakes
- Working across the penalty calculation instead of down each column. Complete each column on lines 10 through 22 before moving to the next column.
- Using the previous year's tax liability without meeting the conditions. The preceding year must have been a 12-month tax year, the corporation must have filed a Colorado return, and the corporation must not be a large corporation under section 6655 of the federal IRS code. Large corporations have a special first-quarter rule.
- Missing the large-corporation catch-up payment. Any first-quarter underpayment resulting from use of the previous year's liability must be paid with the second quarterly payment.
- Not adjusting for a short tax year. Adjust lines 9, 10, and 11 accordingly.
- Leaving out the form or penalty total. Include DR 0205 with DR 0112 and carry the total penalty to DR 0112, line 51.
Questions people ask
How is the required annual payment figured?
Generally, it is the smaller of 70% of actual net Colorado tax liability or 100% of the preceding year's Colorado tax liability. The previous-year option applies only if that year was a 12-month tax year, the corporation filed a Colorado return, and it 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.
Can a large corporation use the previous year's tax liability?
A large corporation can base its first-quarter estimated payment on 25% of the previous year's tax liability. Future payments must be based on the current year's actual tax liability, and any resulting first-quarter underpayment must be paid with the second quarterly payment.
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 the annualized installment method schedule to determine the amounts to enter on line 11.
What penalty rates does this form use?
Lines 18 and 21 use 12% for dates in 2025 and 11% for dates in 2026. Each calculation multiplies the underpayment by the applicable rate and the number of days, then divides by 365, or 366 for a leap year.