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November 12 , 2006 -- I currently donate to one of my county’s local child care organizations, how do I make sure these organizations are eligible for the 50% child care credit, and if they are, how do I go about obtaining the credit on my taxes for these contributions?

The state of Colorado, in an effort to promote quality child care and support economic growth, offers a 50% state tax credit for contributions that promote and develop child care activities. This 50% state tax credit is in addition to your regular state and federal contribution credits.

To qualify for this 50% state tax credit the donation must be monetary. Donations of clothing or toys will not qualify. The donation must be made to:

  • 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
  • A registered child care program that provides services similar to a licensed child care center

Contributions will not qualify if any of the following apply:

  • The contribution is made to a child care facility in which the taxpayer or a person related to the taxpayer has a financial interest
  • The contribution is made to a for-profit business (unless the contribution is directly used for the acquisition or improvement of facilities, equipment, or services, including the improvement of staff salaries, staff training, or the quality of child care)
  • The contribution is not directly related to promoting child care in Colorado
  • The contribution is made after December 31, 2009
  • The donor receives consideration from the donee organization in exchange for the contribution. If this is the case, there is a sale rather than a contribution. However, this will not restrict a company from contributing to a child care center and claiming a credit based on that donation if the employees of the company receive a benefit in the form of discounted child care. One of the goals of this tax credit is to encourage employers to contribute to child care for their employees, assuming that the employer has no financial interest in the child care facility.

Limitations:

  • The credit allowed shall not exceed $100,000 per year.
  • The credit allowed shall not exceed the tax liability for the year. Any excess credits may be carried forward for up to five years.

For all donations Form DR 1317 must be provided by the donee organization to the donor certifying the child care contribution. The organization must be licensed by the Department of Human Services or, if not licensed, registered with the Department of Revenue. The DR 1317 must be attached to a paper income tax return that claims the child care contribution credit, or supplied to the Department of Revenue upon request if the income tax return is filed electronically.

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