The Colorado Child Care Tax Credit allows a donor to receive a 50% tax credit up to the dollar amount of contribution to an eligible organization. Initially designed to help charities that promote child care, Mark explains how the list of organizations eligible is quite extensive.
An example is then shown, highlighting the difference between a tax deduction and a tax credit. By giving to a charitable cause eligible for the Child Care Credit program, an individual receives the federal and state tax deduction, as well as the 50% state credit of the amount donated. This yields an additional tax savings and decreased out-of-pocket expense.
Mark closes explaining an added benefit of the tax credit for those required to take a minimum distribution from their retirement accounts. If you are over age 70 ½, you can have your charitable contribution (up to $100,000) go directly to the Child Care Credit program to avoid a phase out of your deduction and still receive the Colorado Tax Credit.
The information in this video is intended for educational purposes as you think about your year-end tax plans. You should discuss any tax or legal matters with the appropriate professional.
Mark J. Smith is principal of M.J. Smith and Associates, a Denver wealth management firm. He is a Certified Financial Planner™ practitioner, a Certified Public Accountant and Personal Financial Specialist, and a Certified Investment Management Analyst®. The firm offers fee-based asset management services with a comprehensive financial planning approach that includes income tax planning. M.J. Smith and Associates is an independent registered investment advisor with the U.S. Securities and Exchange Commission. For more information call 303-768-0007 or visit http://www.mj-smith.com. Securities offered through Raymond James Financial Services Inc., member FINRA/SPIC.