Contrary to recent reports, the Colorado Child Care Contribution Credit (5C) program is available for qualifying gifts completed by December 31, 2010. For the years 2011 through the credit’s sunset in 2019, the Colorado Legislature can decide on a year-by-year basis whether the credit will be available for the following year based on state revenue projections.
Organizations must apply to the Colorado Department of Revenue in order to qualify to offer these tax credits. Jewish organizations in the Boulder area who have qualifying programs include Boulder Jewish Day School, Boulder Jewish Community Center (and its Preschool), and Colorado Agency for Jewish Education (Boulder Hebrew High).
The credit program itself is extremely tax efficient for donors. It provides a donor a Colorado state tax credit equal to 50% of the qualifying contribution (up to a total credit of $100,000 per year). This is in addition to the usual charitable deduction available on a taxpayer’s Schedule A. This combination of deduction for state and federal taxes plus the state tax credit can make the effective cost to the taxpayer as little as 30% of the actual donation amount. (Donors should consult their tax advisor for advice regarding their specific situation.)
The 5C tax credit program was originally created by the Colorado Legislature in 1999 to encourage charitable contributions to organizations that provide child care outside of normal school hours. The program has been extended twice, most recently in 2008. The 2008 extension, however, only guaranteed the credit for two more years (2009 and 2010) and then made its availability to taxpayers contingent on the forecasted condition of overall state revenues as of the preceding December. More information is available from the Colorado Department of Revenue in their publication FYI #35.