|  | The Colorado Child Care Contribution Credit - What a deal! In March of 2004, the Colorado Legislature extended the Child Care Contribution Credit through December 31, 2009. The State of Colorado has chosen to encourage taxpayers to contribute to programs that promote child care in Colorado. The Colorado Child Care Contribution Credit allows Colorado taxpayers who make a monetary contribution to promote child care (provided to children twelve years of age or younger) by claiming an income tax credit on the Colorado Income Tax Return of 50 percent of the total contribution. The credit allowed cannot exceed $100,000 per year and cannot exceed the tax liability for the year. Any excess credits may be carried forward for up to five years. A tax credit is a dollar for dollar decrease on your taxes owed. In addition to receiving the credit for Colorado, the contribution qualifies as a charitable contribution on federal income taxes. Here’s how it works. Assume you make a $1,000 cash donation to a qualified child care facility or program and are in the 28% tax bracket. You would receive a $500 Colorado tax credit and could save $280 in Federal taxes and $47 in Colorado taxes. So…your gift of $1,000 only costs you $173! Your Tax Bracket | 10% | 15% | 25% | 28% | 33% | 35% | Your gift | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | | | | | | | | Your federal tax savings | 100 | 150 | 250 | 280 | 330 | 350 | Your Colorado tax savings (4.7%) | 47 | 47 | 47 | 47 | 47 | 47 | Your Colorado tax credit | 500 | 500 | 500 | 500 | 500 | 500 | Your total tax savings | 647 | 697 | 797 | 827 | 877 | 897 | | | | | | | | Your net cost of gift | 353 | 303 | 203 | 173 | 123 | 103 |
Child care organizations either have to be licensed by the Department of Human Services or be registered with the Colorado Department of Revenue in order to receive contributions that qualify for the tax credit. Before making your contribution, ask the donee organization if they qualify. To take the credit, the donee organization must provide Form DR 1317, which certifies the child care contribution, to the donor. Form DR 1317 must be attached to your Colorado Income Tax Return. The information presented in the Tax Newsletter is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly, cannot be regarded as legal or tax advice. Please contact your tax advisor for more information on the subject and how it pertains to your specific situation. |  | |  |
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Collins, CO 80526-5524