Tax Savings with The Colorado Child Care Contribution Credit

For Colorado residents, the Colorado Child Care Contribution Credit can offer fantastic tax savings. Depending on your marginal tax bracket, you can see savings from 70-94% of the contribution you make! You can make a qualifying contribution to promote child care in Colorado and claim a state income tax credit of 50% of the contribution. Plus, you make get a deduction on your federal and Colorado state return as well. You do have to follow some rules, and not all taxpayers will qualify for the deductions or Colorado Child Care Contribution Credit credit. Here’s what is a “qualifying contribution”:
  • The contribution must be monetary (meaning that non-cash donations of property like clothing or toys do not qualify for the credit.
  • The credit is allowed only for contributions that promote child care in Colorado, usually only for children age 12 or younger
  • It must be made to a licensed child care facility, an approved facility school, or a registered or grandfathered child care program. You can look up the registered facility list here. This list is also available sorted by city:
Licensed child care facilities and approved facility schools Licensed child care facilities to which qualifying contributions can be made include the following facilities that are licensed by the Colorado Department of Human Services:
  • child care centers
  • child placement agencies
  • family child care homes
  • foster care homes
  • homeless youth shelters
  • residential child care facilities
  • secure residential treatment centers,
  • Qualifying contributions can also be made to any facility school approved by the Facility Schools Board that is also affiliated with a licensed or certified hospital in Colorado and is also a nonprofit organization.
There are some additional restrictions and items to note about the credit.
  • The credit is nonrefundable, meaning the maximum credit is the lower of 50% of your contribution or your Colorado tax liability (before allowing for other credits, estimated payments or withholdings). You can carry forward any unused credits to the next 5 tax years.
  • In order to receive the tax deductions on your federal return, you must be able to itemize deductions (you total itemized deductions must exceed the standard deduction). This is true for all charitable contributions, not just this credit.
  • The maximum credit you can claim is $100,000 per year.
  • The contribution must be made on or before December 31, 2019.
If you make this contribution, be sure to get a Form DR 1317 Child Care Contribution Tax Credit Certification from the organization to which you are donating. You will need this form to claim the credit on your Colorado tax return. If you’d like more information about tax savings from the Colorado Child Care Contribution Credit, contact Steve Trojan, CPA in Boulder, CO. Would you like more content like this? Subscribe to our newsletter!
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