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 be on the employer, the employee or both 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.
By default, all companies and employees are considered liable for the OPT tax. 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.
How to Change a Company Colorado OPT Tax Exemption Status
Most companies and employees are required to pay these taxes by default.
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 have the OPT taxes calculated, and shouldn't have or visa 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 have the OPT taxes calculated, and shouldn't have or visa versa, please contact our support team for payroll edits.