Occupational Privilege Taxes (OPTs) are taxes paid for the “privilege” of working in a locality and/or engaging in business there.
Denver OPT, Aurora OPT, Glendale OPT, Greenwood Village OPT, and Sheridan OPT can apply to the employer, the employee, or both, for those who work within city limits.
Employee OPT tax amounts are a flat amount per month if the employee earns at least a given threshold amount of wages in the month.
Employer OPT tax amounts are a flat amount per month for each employee subject to the OPT.
The default for the OPT taxes is not exempt, meaning the tax will calculate. If your company or a specific employee qualifies for an OPT exemption, you can record that status in payroll following the steps below. You will need to mark these exemptions before you run payroll in order for the tax to not calculate. You cannot change this exemption in the middle of a payroll.
Patriot Payroll calculates Denver OPT, Aurora OPT, Glendale OPT, Greenwood Village OPT, and Sheridan OPT, and deposits and files if you are Full Service and completed your payroll tax filing setup.
If you need to change an exemption status for the company or an employee for one of the Colorado Occupational Privilege Taxes, you must change their exempt status before you run payroll.
How to Change a Company Colorado OPT Tax Exemption Status
Go to Settings > Payroll Settings > Tax Exemptions.
Click the Colorado tab.
Scroll to the Colorado OPT section, which displays your company's current exemption status.
Click the button that reads Add OPT Exemption Status.
Click the appropriate radio button: Not Exempt or Exempt, depending on your situation.
Enter an Effective Date from the dropdown. You can choose a custom date if needed.
Click Save.
Your update will appear in the Colorado OPT Exemption Status History table below, along with the date and time it was entered.
If the company has had payrolls that have already had the OPT taxes calculated, and shouldn't have or vice versa, please contact our support team for payroll edits.
Exempting an Employee from Colorado OPT
For individual employees, Colorado OPT falls under the Local City Taxes exemption setting, since OPT is a city-level occupational tax.
Go to Payroll > Employees > Employee List> Employee Name.
Select the Advanced Tax Settings tab on the employee's profile.
Scroll down to the Local City Taxes section.
Click Add Local City Taxes Exemption Status.
Choose Exempt or Not Exempt as appropriate.
Select an Effective Date.
Click Save.
The change will be logged in the Local City Taxes Exemption Status History table for that employee.
Since OPT rules vary by city, make sure you're applying the exemption for the correct reason, such as the employee working outside a taxing jurisdiction or falling under a specific wage threshold exception, and consider confirming details with the relevant city's tax office or a tax professional if you're unsure.
If the employee has had payrolls that have already had the OPT taxes calculated, and shouldn't have or vice versa, please contact our support team for payroll edits.