Colorado offers a Child Care Expense Credit for qualifying taxpayers who paid child or dependent care expenses so they (and their spouse, if filing jointly) could work or actively look for work.
Depending on income and eligibility, taxpayers may qualify for either the Colorado Child Care Expense Credit or the Low-Income Child Care Expenses Credit.
Program Entry
Colorado Return → Credits → Child Care Expense Credit Adjustment to Earned Income
Who Qualifies for the Credit?
To claim the Colorado Child Care Expense Credit, all of the following requirements must be met:
- You must file a federal Form 1040, 1040-SR, 1040-SP, or 1040-NR.
- You must be a full-year or part-year resident of Colorado.
- You (and your spouse, if filing jointly) must have earned income during the tax year.
- You must have paid qualifying child or dependent care expenses so you could work or actively seek employment.
- The care must have been provided for one or more qualifying persons.
- You cannot file using the Married Filing Separately filing status.
- You must identify the care provider and provide the required provider information.
Nonresident Colorado taxpayers are not eligible for this credit.
Who Is a Qualifying Person?
Generally, a qualifying person is:
- A qualifying child who meets the federal requirements for child and dependent care expenses; or
- A qualifying dependent who was physically or mentally incapable of self-care.
For the Low-Income Child Care Expenses Credit, only expenses paid for qualifying children under age 13 may be eligible.
Who Cannot Be the Care Provider?
The credit cannot be claimed for payments made to:
- Your spouse;
- The parent of your qualifying child if the child is under age 13; or
- An individual you can claim as a dependent.
If you paid your child to provide care, the child must:
- Be age 19 or older by the end of the tax year; and
- Not be claimed as your dependent.
Income Limitations
If Colorado adjusted gross income exceeds $60,000, the taxpayer does not qualify for the Colorado Child Care Expense Credit.
For the Low-Income Child Care Expenses Credit:
- Colorado adjusted gross income must be $25,000 or less.
- Taxpayers who were not required to file a federal return, or who were unable to claim the federal Child and Dependent Care Credit, may still qualify.
Part-Year Residents
Part-year Colorado residents may qualify for the credit. Any allowable credit is prorated based on the taxpayer's Colorado apportionment percentage.
How Does This Affect My Return?
The credit is calculated on Form DR 0347, Child Care Expenses Credit, and reported on Form DR 0104CR.
Depending on the taxpayer's circumstances, this credit may reduce Colorado tax liability and potentially increase a refund.
Notes
- All required information for the care provider must be entered before the credit can be calculated.
- If the provider's Social Security Number or Employer Identification Number cannot be obtained, documentation showing an attempt to obtain the information should be retained.
- Taxpayers with multiple care providers or additional qualifying dependents may need to provide additional information.
- It is recommended that taxpayers review the federal child and dependent care expense rules when determining eligibility.