(303) 499-7445 info@tandemcpas.com

Year-end Reminders

Colorado Information

  1. CO Income Tax Rate remains at 4.4% for 2023.
  1. Paying Taxes by Cryptocurrency – Colorado accepts tax payments by cryptocurrency. Payments must be made from an individual PayPal Cryptocurrency Hub. More details, including fees, can be found in the link below: https://tax.colorado.gov/cryptocurrency#.
  1. Colorado College Saving Account – CO allows a subtraction for contributions made to the CO state 529 plan through CollegeInvest.
  • 2023 – The state deduction for contributions to CO 529 plans is limited to $20,700 per year per beneficiary ($31,000 if married filing jointly).  Contributions must be made by 12/31/23 to be eligible for a deduction on the 2023 CO return.
  • Matching grant program – CollegeInvest will match contributions to 529 accounts.  See link below for more information and eligibility requirements. https://www.collegeinvest.org/matching-grant-program/
  • CollegeInvest 529 Scholarship Program – $2,000 scholarship for 2024-2025 school year.  Applications accepted beginning 8/1/24 – 9/30/24.  See link below for more information: https://www.collegeinvest.org/collegeinvest-529-scholarship-colorado/
  • CO 529 plan distributions can now be used for apprenticeships and not just college / universities (higher education). Eligible programs are listed here:  https://www.apprenticeship.gov/apprenticeship-job-finder
  • First Step – First step is a new program passed by the CO legislature wherein CollegeInvest will contribute $100 for every newborn or adopted child.  Learn more with this link: https://www.collegeinvest.org/ 
  1. Colorado Deduction Limitation – Beginning in 2023, taxpayers whose adjusted gross income is over $300,000 will have their federal standard or itemized deduction limited on their Colorado return to $12,000 ($16,000 married filing jointly/MFJ).
  1. CO Child Tax Credit – There is a refundable Colorado tax credit for taxpayers who have children under age six and whose income is under $75,000 ($85,000 for MFJ).
  1. CO Credit for Heat Pumps – Effective 1/1/23, there is a new CO credit and sales tax exemption for heat pumps and heat pump water heaters.  The tax credit is 10% and the sales tax exemption is 2.9%.  The discount also applies to electrical panel upgrades if needed for the heat pump or heat pump water heater installation.  The credit went into effect beginning January 1, 2023.
  • 2023 – The tax credit is 10% of purchase price and sales tax exemption is only eligible for 2023 tax year.
  • 2024 through 2032 – The credit will be $1,500 or $3,000 (depending on type of heat pump), and the credit will reduce your purchase price of the heat pump.
  1. CO rebate for electric equipment – 30% discount for lawnmowers, leaf blowers, trimmers, and snow blowers should reduce the purchase price from a participating retailer.
  1. Wildfire Mitigation Measures – For tax years 2023 – 2025, CO allows an income tax credit for qualifying taxpayers who incur actual out-of-pocket expenses for wildfire mitigation on their property.  The credit equals 25% of up to $2,500 of expenses.  To take the credit, federal taxable income may not exceed $120,000 for 2023.
  1. CO Homeless Contribution Income Tax Credit (HCTC) – In 2022, HB 22-1083 was passed and it provides a tax credit to CO taxpayers who contribute to eligible homelessness-related projects within CO.  Beginning 1/1/23, tax benefits are 25% of donation (monetary or in-kind) as a CO tax credit if contributed to a qualified organization in a non-rural county and 30% if contributed in a rural county.
  1. Colorado Electric Car Credits
  1. Colorado Tabor Sales tax credit– In the past, this amount has varied with income. For 2023 only, the amount will be a flat $800 ($1,600 if MFJ). This will be on your Colorado income tax return this spring if you qualify.
  1. Use Tax
    •  
    • Basics – Use tax is due on purchases for which you have not paid sales tax.  This can happen when item is purchased online or in person in a low-tax jurisdiction. Many online retailers (like Amazon) are already collecting sales tax, but smaller out-of-state businesses may not be required to collect it. If sales tax is not collected when you purchase the item, use tax needs to be paid on such purchases.
    • Filing – We can include this tax on your 2023 tax return. Please provide the amount of untaxed purchases on the 2023 tax organizer that will be sent to you in January 2024.
  1. Colorado FAMLI Act – Starting in January of 2024, this program will pay a portion of your wages if you miss work due to a serious health condition (your own or a family member’s), a new child, or certain other life events. Under federal law, employers with at least 50 employees must offer unpaid leave up to 12 weeks to employees in these situations. The new FAMLI program will pay a portion of wages for 12-16 weeks.
    • FAMLI applies to businesses with any number of employees.
    • Your employer may opt out if they offer similar coverage through a private plan.
    • If you are self-employed, you can choose to participate. (You will be required to opt-in for at least three years).
    • Starting in January of 2023, employees had additional withholding of 0.45% ($4.50 for each $1,000 of wages) for the family leave program.
    • Benefits become available in January 2024.
    • More information is at https://famli.colorado.gov/

(303) 499-7445

info@tandemcpas.com

287 Century Circle, Suite 200, Louisville, CO 80027

Tandem CPAs LLC  (Colorado firm license #FRM.5000548).

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