For Last-Minute Donations, Keep Child Care Contribution Credit in Mind

With the end of the year fast approaching, many are looking to round out their charitable contributions. The Child Care Contribution Credit offered in Colorado—now available again after being suspended temporarily—can be a great option for individuals interested in helping expand child care options for those who may be otherwise priced out.

The program provides a Colorado income tax credit of up to 50 percent of any monetary contribution made to a qualifying child care organization or fund, which includes facilities like licensed child care centers, licensed foster care homes, licensed homeless youth shelters, and licensed child placement agencies. The credit cannot exceed $100,000 per year, and cannot exceed tax liability for the year. Excess credits can be carried forward for up to five years.

The credit was suspended in 2011 and 2012 due to budget constraints, but came back in 2013 with a phased-in approach that allows taxpayers to claim a portion of tax credits from 2011 and 2012 that were disallowed. For 2014, a taxpayer can claim up to 75 percent of the sum of all prior year deferrals and carryforwards, plus any credit amount generated during the tax year. For 2015 or later, only the standard credit limitations apply (e.g., 50 percent limitation, credit cannot exceed $100,000 and credit cannot exceed tax liability).

Check out the Colorado Department of Revenue website for more information, including the FYI on the Child Care Contribution Credit.

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