Who this is for
If your tax life is just a single W-2, software is probably fine. This page is for the Denver residents whose returns have moving parts: a side business, a rental unit in Wash Park, an Airbnb in the Highlands, stock options from a downtown employer, or a move from another state.
Denver layers on your return
| Item | What to know |
|---|---|
| Federal return | The base. Every number on your Colorado return starts here. |
| Colorado return | Starts from federal taxable income, then state adjustments and a flat rate. |
| Denver OPT | $5.75 a month withheld from paychecks once you earn at least $500 a month from one employer in Denver. |
| Rental property | Depreciation, repairs vs. improvements, and passive loss limits. |
| Short-term rentals | Denver STR licensing and the 10.75% lodger's tax, plus income reporting. |
Landlords and hosts
Denver's rental market makes a lot of accidental landlords. The tax side catches people off guard: depreciation they forgot to take, improvements written off as repairs, and short-term rental income that should have been collecting lodger's tax all along. Getting these right in year one saves real money later, especially when you sell.
New to Denver?
Moving here mid-year usually means two state returns: a part-year Colorado return and one for the state you left. Income gets divided by when and where you earned it. It's a common, solvable puzzle.
Common questions
Do Denver Airbnb hosts owe city taxes?
Generally yes. Short-term rentals in Denver are subject to the city's lodger's tax and need the proper city license, in addition to reporting the income on federal and Colorado returns.
Does Denver have a city income tax?
Not a traditional one. Denver's occupational privilege tax is a flat monthly amount tied to working in Denver, not a percentage of income.
Can I deduct my home office in Denver?
Self-employed people who use a space regularly and exclusively for business usually can. W-2 employees generally can't under current federal law.