If you claimed certain Colorado tax credits in a previous year, you may need to repay a portion of that credit if a recapture event occurs. Colorado refers to this as the Recapture of Prior Year Credits and reports it on Line 15 of Form DR 0104. Under Colorado law, some credits must be paid back if specific requirements are no longer met after the credit was originally claimed.
What Is a Recapture of Prior Year Credits?
A recapture is an additional tax amount that must be added back to your Colorado return when a previously claimed credit becomes subject to repayment.
This does not apply to most taxpayers. It generally affects taxpayers who claimed a Colorado credit in an earlier year and later experienced an event that triggered a repayment requirement under the rules for that credit.
Credits That May Require Recapture
According to the Colorado Individual Income Tax Instructions, credits that may be subject to recapture include, but are not limited to:
- Affordable Housing Credit
- Affordable Housing in Transit-Oriented Communities Credit
- Middle-Income Housing Credit
- Employer Assistance for Home Purchase Credit
- Historic Property Preservation Credit
- Industrial Clean Energy Credit
How Do I Know If I Need to Enter an Amount?
You may need to enter a recapture amount if:
- You claimed one of the credits listed above in a prior tax year.
- You received documentation, calculations, or instructions indicating that part of the credit must be repaid.
- A qualifying event occurred that causes the previously claimed credit to become subject to recapture under Colorado law.
If none of these situations apply, you can generally leave this section blank.
How to Enter the Recapture Amount in Our Software
- Select State from the left navigation panel
- Use the three dots to Edit your Colorado return
- Tax
- Enter the recapture amount shown on your supporting documentation.
The recapture amount is reported on Line 15 of Form DR 0104, Recapture of Prior Year Credits. Our software will include the amount on the appropriate Colorado tax line and add it to your state tax calculation.
What If I Am Not Sure Whether a Credit Must Be Recaptured?
Review the documentation you received when the original credit was claimed and any notices related to that credit. The recapture rules vary by credit type. If you are unsure whether a repayment is required, consult the guidance for the specific Colorado credit you claimed before entering an amount on your return.