We all know that child care facilities that are non-profit provide taxpayers who donate to them a charitable deduction on their tax return. But did you know that Colorado also offers a credit to taxpayers who donate to child care facilities? Well it does! Colorado offers a Child Care Contribution Credit for 50% of the amount you gave to the facility on your tax return. So it’s like getting a double tax benefit. Once on your federal return and again on your Colorado return!
The donated money must be for an establishment in Colorado such as:
• A licensed child care center
• A licensed child placement agency
• A licensed family child care home
• A licensed foster care home
• A licensed homeless youth shelter
• A licensed residential child care facility
• A licensed secure residential treatment center
You can also donate money for a registered grant or loan program for parents in Colorado requiring financial assistance for child care. But you cannot donate to a facility in which you or a person related to you has a financial interest. So directors of the facility are not eligible for this credit and neither are their spouses.
Now due to Colorado’s current budget condition the credit cannot be claimed for 2011 or 2012, but it can be carried forward to 2013. The child care facility needs to provide you with a DR 1317 for your contribution amount. You will fill out 104CR for Colorado with how much you donated and what your 50% credit should be, you just won’t get to take the credit in 2011 instead, you will carry it forward and use it in 2013.
For tax year 2013, the maximum credit that can be used to offset tax is limited to 50% of the total carried forward from 2012 and any credit generated by donations made in 2013. And then in 2014 75% of the total carried forward from 2013 and any credit generated by donations made in 2014 will be used to offset tax. So you will eventually get to use your credit generated by your donations made in 2011.
So go ahead and donate to a local child care facility such as Teaching Tree Early Childhood Learning Center and take advantage of a chance to do something good for the community and get a deduction on your federal tax return and a credit on your Colorado return.