Charitable contributions to Big Brothers Big Sisters of Southwest Colorado, Inc. (“BBBS”) qualify for the Child Care Contribution Tax Credit (“CCCTC”). The CCCTC provides a valuable credit against a taxpayer’s Colorado state income tax. The credit equals 50% of the amount of a direct donation made to a qualifying Colorado charitable organization that promotes childcare. A taxpayer (or two taxpayers filing jointly) can claim a credit of up to $100,000 per year. Resident and nonresident individuals, estates, trusts, and C corporations can all claim the credit for qualifying contributions they make, either directly or as a partner or a shareholder in a partnership or S corporation that makes a qualifying contribution. Taxpayers can carry forward excess credits for five years. In addition, the contribution is also deductible from state income taxes; and the portion of the charitable contribution that is not credited back to the taxpayer is deductible from federal income taxes.
Examples: A contribution to BBBS by a taxpayer in the 24% federal marginal tax bracket who itemizes deductions and who has reached the $10,000 threshold on deductible state and local taxes, will result in the following tax savings, and the following net cost of the charitable contribution to the taxpayer:
Note – This explanation of the CCCTC is not legal advice and is not a substitute for professional tax, legal, or accounting counsel. The example above is only a hypothetical example. The tax consequences of your donation to BBBS will vary based on your individual circumstances.