Colorado Subtractions from Income
UNITED STATES GOVERNMENT INTEREST
Enter the sum of all interest earned from U.S. government bonds, treasury bills, and other obligations of the U.S. or its territories, possessions, and agencies that you reported on your federal income tax return and is calculated as part of your federal taxable income.
Note: Do not enter interest earned from Federal National Mortgage Association and Government National Mortgage Association (Fannie Mae and Ginnie Mae). Dividends received from mutual funds may not be 100% exempt.
PENSION AND ANNUITY SUBTRACTION
You might be eligible to subtract the income earned from a pension or annuity. Enter the qualifying amount if you:
- Earned income from a pension/annuity that was not a premature distribution; and
- It was included on your federal income tax return and is calculated as part of your federal taxable income; or
- It was a lump-sum distribution and, as of December 31, 2015 you:
- Were age 65 or older, then you are entitled to subtract $24,000 or the total amount of your taxable pension/annuity income, whichever is smaller; or
- Were at least 55 years, but not yet 65, then you are entitled to subtract $20,000 or the total amount of your taxable pension/annuity income, whichever is smaller; or
- Were young than 55 years, and you received pension/annuity income as a secondary beneficiary (ex: widow, dependent child, etc.) due to the death of the person who earned the pension/annuity, then you are entitled to subtract $20,000 or the total amount of your secondary beneficiary taxable pension/annuity income, whichever is smaller. If this applies to you, please list the Social Security number of the deceased in the space provided.
Note: Pension/annuity income should not be inter-mingled between spouses. Each spouse must meet the requirements for the subtraction separately and claim the subtraction only on their pension/annuity income.
The program will calculate the applicable subtraction according to your age.
TUITION PROGRAM CONTRIBUTION
Contributions to qualified Colorado tuition savings plans can be deducted from your return. The contribution must have been included on your federal income tax return and calculated as part of your federal taxable income. Note: DO NOT deduct contributions made to a tuition savings plan for another state or any tuition you paid while attending school.
QUALIFYING CHARITABLE CONTRIBUTION
Taxpayers who claim the federal standard deduction instead of itemizing their deductions on the federal return may be able to subtract a portion of their charitable contributions made during the year. Enter only the amount in excess of $500 that you could have deducted on federal Schedule A under the “Gifts to Charity” section had you itemized your federal deductions. Note: DO NOT enter an amount if you already deducted your charitable donation on Schedule A of the federal 1040 form. Otherwise, you will be issued an assessment that will likely include penalty and interest.
OTHER SUBTRACTIONS FROM FEDERAL TAXABLE INCOME
- If you received PERA or Denver School District No. 1 retirement benefits (DPSRS) during 2015 and you contributed to the PERA retirement fund during 1984, 1985 or 1986 or to the Denver School District No. 1 retirement fund during 1986, you may be entitled to a subtraction for income previously taxed by Colorado but not by the federal I.R.S.
- Enter any tier I or tier II railroad retirement benefits that are included in federal taxable income.
- Enter any income earned on a Native American Indian reservation by a recognized tribal member while domiciled on the reservation.
- Enter 50% of the cost incurred in performing wildfire mitigation. This subtraction may not exceed $2,500.
DO NOT Include:
- income from sources outside of Colorado,
- net operating losses,
- military income, or
- wage adjustments.
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