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A brand new state tax credit score price 1000’s of {dollars} is now obtainable to many Colorado households with youngsters underneath 17.
It’s referred to as the household affordability tax credit score and is predicted to assist lots of of 1000’s of cash-strapped households throughout the state. Lawmakers and advocates who championed the credit score throughout final 12 months’s legislative session see it as an opportunity to handle Colorado’s excessive value of dwelling and decide up the place the federal authorities left off when its expanded little one tax credit score expired in 2021.
That expanded tax credit score helped minimize little one poverty in America almost in half to a historic low of 5.2% in 2021. By 2023, little one poverty charges jumped to 13.7%.
Since then, a number of states have expanded or created their very own little one tax credit. Colorado, which already had a toddler tax credit score for households with younger youngsters, created the household affordability credit score to supply extra monetary assist to households already getting the kid tax credit score and provides new help to decrease earnings households with older youngsters.
Right here’s what you have to know concerning the new credit score.
What’s the household affordability tax credit score?
It’s a brand new state tax credit score for decrease earnings Colorado households with youngsters underneath 17. It was created throughout the 2024 legislative session and is now obtainable for the primary time to households submitting their 2024 tax returns.
Eligible households can get a tax credit score of as much as $3,200 for every little one who was 5 or youthful as of Dec. 31, 2024, and as much as $2,400 for every little one who was 6-16 years previous as of Dec. 31, 2024. The scale of the credit score goes down as household earnings goes up, finally phasing out when single tax filers hit an adjusted gross earnings of greater than $85,000 a 12 months and joint tax filers hit an adjusted gross earnings of greater than $95,000 a 12 months.
How is it totally different from Colorado’s little one tax credit score?
The household affordability tax credit score is way larger than the state’s little one tax credit score and contains households with older youngsters. For instance, a single mom who earned $30,000 in tax 12 months 2024 and has a 4-year-old and 7-year-old would obtain a household affordability tax credit score of $4,445 and a state little one tax credit score of $600. (The state little one tax credit score is just obtainable to decrease earnings households with youngsters underneath 6.)
It’s additionally price noting that, in contrast to the state little one tax credit score, the household affordability credit score is probably not obtainable yearly. That’s as a result of lawmakers determined to supply it solely in good financial instances when the state collects sufficient surplus tax income to fund it. Throughout unhealthy years when the state collects too little surplus tax income, the state will cut back the quantity of the credit score or chorus from providing it in any respect.
How do I do know if I’m eligible for household affordability credit score?
Use the tax credit score calculator from Get Forward Colorado, which is run by the Colorado Division of Public Well being and Setting. The net software asks just a few questions on your earnings and the variety of children you will have and spits out an inventory of state and federal tax credit chances are you’ll be eligible for, together with the household affordability credit score.
The tax credit score calculator is obtainable in dozens of languages by clicking on the “Choose Language” button within the prime proper nook.
I don’t make sufficient to pay earnings taxes. Am I nonetheless eligible?
Sure, the household affordability tax credit score is refundable. That signifies that even when eligible households owe nothing in taxes, the state can pay them the quantity of the credit score so long as they file a state tax return.
Households who earn sufficient to pay earnings taxes should get a reimbursement if their household affordability credit score exceeds the quantity they owe the state.
I don’t have a Social Safety quantity. Am I nonetheless eligible?
Probably. Dad and mom who don’t have a Social Safety quantity could also be eligible for Colorado’s household affordability tax credit score if they’ve an Particular person Taxpayer Identification quantity — or ITIN — and their eligible youngsters have a Social Safety quantity.
ITIN numbers can be found from the Inside Income Service to sure people who’re categorized as resident aliens or nonresident aliens, no matter immigration standing.
Will getting the household affordability tax credit score cut back my SNAP advantages?
No. Tax credit usually are not thought of earnings and won’t negatively have an effect on most advantages, together with SNAP, TANF, and Medicaid.
Are there different tax credit for Colorado households with youngsters?
Sure. Each the federal authorities and the state have earned earnings tax credit, which can be found to decrease earnings households with or with out youngsters. Each additionally supply little one tax credit, with the federal model obtainable to qualifying households with youngsters underneath 17 and the Colorado model obtainable to qualifying households with youngsters underneath 6.
How can I get assist filling out my tax returns?
You should utilize myfreetaxes.com, an internet program provided by way of United Method. It’s additionally obtainable in Spanish.
One other free choice is getyourrefund.org/en, which permits filers incomes underneath $67,000 a 12 months to get on-line help from licensed volunteers. It’s additionally obtainable in Spanish.
At no cost in-person assist from licensed volunteers, think about the Colorado Volunteer Earnings Tax Help program, also called VITA. Verify this listing for VITA websites, hours, and different particulars.
Lastly, Get Forward Colorado has quite a lot of different tax submitting assets obtainable.
Ann Schimke is a senior reporter at Chalkbeat, masking early childhood points and early literacy. Contact Ann at aschimke@chalkbeat.org.