If you claimed certain Colorado tax credits in a prior year, you may be required to repay all or part of the benefit you previously received. Colorado refers to this repayment as a Recapture of Prior Year Credits, and the amount is reported on Line 15 of Form DR 0104, Colorado Individual Income Tax Return.
A recapture amount increases your Colorado tax liability for the current tax year.
A recapture amount increases your Colorado tax liability for the current tax year.
What Is Credit Recapture?
Certain Colorado tax credits are granted only if specific requirements continue to be met for a designated period of time. If those requirements are no longer satisfied after the credit is claimed, Colorado law may require a portion of the credit to be repaid.
A recapture is not a penalty. Instead, it is a mechanism used to recover a tax benefit that no longer qualifies under the credit's rules. The recapture amount is added back to your Colorado income tax return as additional tax.
Credits Commonly Subject to Recapture
According to Colorado filing guidance, credits that may require 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
Each credit has its own recapture provisions and qualifying events. The amount that must be repaid depends on the specific credit and the circumstances that triggered the recapture.
Common Recapture Events
A recapture requirement may occur when:
- Property associated with a credit is sold before a required holding period ends.
- The property or project ceases to qualify for the credit.
- A taxpayer fails to maintain compliance with program requirements.
- Credits are reduced or disallowed after a review by a state agency.
- A qualifying asset is disposed of, removed from service, or used for a nonqualifying purpose.
Because each credit has unique rules, the triggering event and recapture calculation will vary by credit program. Review the instructions and certification documents for the specific credit originally claimed.
How Do I Determine My Recapture Amount?
You generally should not estimate a recapture amount.
Instead, use the amount provided in:
- Credit certification documents
- Colorado Department of Revenue guidance
- Supporting worksheets for the credit claimed
- Documentation received from the issuing agency
- Amended calculations prepared for the affected credit
If a recapture event occurred, there is usually documentation identifying the amount that must be added back to the return.
When Should I Enter an Amount?
Enter a recapture amount if:
- You claimed a Colorado credit in a prior year that is subject to recapture.
- A recapture event occurred during the current tax year.
- You received documentation showing that all or part of the previously claimed credit must be repaid.
- Colorado instructions or credit-specific guidance require an addback on Form DR 0104.
Leave this field blank if:
- You have never claimed a Colorado credit subject to recapture.
- No recapture event occurred during the tax year.
- You have not received any documentation indicating repayment is required.
How to Enter the Amount in TaxSlayer
- From the left navigation panel, select State.
- Open the Colorado return using the three-dot menu.
- Select Tax.
- Locate Recapture of Prior Year Credits.
- Enter the recapture amount from your supporting documentation.
The amount entered will flow to Line 15 of Form DR 0104 and will be included in the calculation of your Colorado tax liability.
Example
In 2023, a taxpayer claimed a Colorado credit related to a qualifying property investment. In 2025, the property was sold before meeting the program's required holding period. The credit program requires repayment of a portion of the original credit.
The taxpayer would:
- Determine the required recapture amount using the credit-specific guidance.
- Enter that amount in the Colorado Recapture of Prior Year Credits section.
- Allow TaxSlayer to report the amount on Form DR 0104 Line 15.
Important Reminders
- Recapture rules differ for each Colorado credit.
- The amount entered is generally treated as additional Colorado tax.
- Keep all supporting documentation with your tax records.
- Review the instructions for the specific credit originally claimed before filing.
- When in doubt, consult the Colorado credit schedule, certification documents, or Department of Revenue guidance applicable to that credit.