United Way News
Child Care Contribution Tax Credit
This Colorado tax credit is generated when you contribute to United Way’s Child Care Contribution Fund. Upon receipt of a donation to this fund, you will qualify for a 50 percent Colorado Tax Credit as well as additional tax savings from the Colorado and federal contribution deduction that occurs when you itemize deductions on your tax return. As an example, a qualifying donation of $250 would generate a $125 Colorado Tax Credit, a $38 federal tax reduction and an additional $12 Colorado tax reduction leaving the donor’s actual after-tax cost at $75. (This is based on an individual in the 15 percent federal tax bracket: high income taxpayers could see additional federal tax reductions up to $61, leaving their tax cost at $14, assuming a 39.6 percent federal tax rate.)
This is a win-win situation, as the donor receives the Colorado tax credit in addition to the normal charitable donation deduction, and the United Way of Weld County receives a donation that will be distributed to one of its qualifying child care organizations.
To make a donation to United Way of Weld County that qualifies for this credit or for more information, call (970) 353-4300 or go to the green donate button at www.unitedway-weld.org and mark United Way’s Child Care Contribution Fund. Once received by the United Way office, you will receive a Child Care Contribution Tax Credit form DR 1317 certifying your child care contribution. You will then attach a copy of this form to your electronically filed Colorado tax return and take the credit.
Enterprise Zone Administrators Tax Credit
If you contribute to the United Way of Weld County’s Northeast 2-1-1 Information and Referral, you will be eligible for a 25 percent credit on your Colorado State income tax return. In other words, you would receive a $250 tax credit on your Colorado return for every $1,000 you donate to this program. This program helps connect families to health and human services. The Enterprise Zone Contribution tax credit helps create and retain jobs, promotes nonprofits and community development projects and assists homeless shelters that provide employment related services in Enterprise Zones. As an example, a qualifying donation of $250 would generate a Colorado tax credit of $63, a $38 Federal tax reduction and an additional $12 Colorado tax reduction, leaving the donor’s actual after tax cost at $137. (This is based on an individual in the 15 percent federal tax bracket; high income taxpayers could see additional federal tax reductions up to $61, leaving their tax cost at $76, assuming a 39.6 percent federal tax rate.)
This donation still qualifies as a charitable contribution on your federal and state income tax return as long as you itemize your deductions. If you contribute an in-kind donation rather than cash/check/credit card/direct bill or electronic funds transfer, the minimum value of the in-kind must be $1,000. You will receive a 12.5 percent credit rather than 25 percent credit for an in-kind donation. You will be required to file your tax return electronically and attach the tax credit certificate that you will receive from the Enterprise Zone Administrator.
Please keep in mind, to receive the tax credit in both cases you must make a cash donation with a minimum amount of $100; the maximum credit shall not exceed $100,000 per year; the credit allowed shall not exceed the tax liability for the year, and excess credits may be carried forward up to five years.
Thank you for considering donating to United Way of Weld County. Knowing that you will receive Colorado tax credits in addition to the normal charitable contribution deduction may encourage you to designate your contribution to one of our qualifying organizations.
Richard Bartels is on the board of directors at United Way of Weld County. He is a certified public accountant and the owner of Bartels & Company, LLC, a full-service CPA firm located in Greeley.