Colorado tax issues have become more complex recently. The State of Colorado Department of Revenue has been more aggressive in auditing & collecting tax from Marijuana sellers. The State even has a series of web pages dedicated to the unique issues in the Marijuana Industry. Marijuana businesses are allowed business deductions even if not allowed by the IRS.
In general the State has become infamous for aggressive collection seizures. They often take 25% of a taxpayer's wages & they will not release a garnishment once it has begun. The issues of Colorado Garnishments are explored more deeply in the "Colorado" section of this website. In most cases the Federal information must be reviewed so that 2 problems will resolve at once.
Issues Unique to Colorado
There are also issues which only effect Colorado residents and Colorado returns. Some main issues unique to Colorado (aside from Marijuana) are:
- the over-55 pension exclusion: You may exclude $24,000 (over age 65) or $20,000 (Age 55-65)
- the Colorado Capital Gains exclusion: Read FYI 15. If you won property for more than 5 years you may be able to exclude a portion of the gain.
- Qualifying Charitable Contributions: Allows deductions even if not allowed by the IRS.
- Child Care Expenses Credit: Refundable credit of 25% of Child Care for low income taxpayers.
- Colorado Earned Income Tax Credit: This is a refundable credit much like the Federal EIC
Each of these has its own rules & relative benefits. You can find more information in the 104 Book or the FYI's.
As you are preparing this year's taxes you can refer to the Colorado Department of Revenue website for information. If you are preparing for an audit of Colorado tax issues in a prior year, you will have to gather information from both the Federal & Colorado governments as well as all private company documents which prove your case.
Be diligent and win against Colorado!
