Claim of Right Colorado

[Avs19]

Hi,

A client received a 50K bonus in 2021. He left the job and had to return it in 2022. Taking the claim of right credit in 2022 would save him the most on the Federal return. Deducting the amount on Schedule A would save him on Federal and State but not as much as taking the credit. I know that some states offer a COR credit but I can't find anything on Colorado. Does this mean if we take the credit on the Federal, we won't be able to do anything about Colorado?

Thanks

[BobKamman · Accepted solution]

I just spent five days in Colorado.  They have a huge parking lot called "Interstate 25."  Well, only if there is an accident on it on a Sunday afternoon.  I also saw a lot of road kill, mostly deer on urban freeways.  But it's a beautiful state, I drove from Trinidad to Denver to Cortez, and altitudes of 5000 feet or higher are certainly better in the summer than 1200 and lower.

The Colorado income tax instructions say, for subtractions:

Do not include amounts that were earned outside
Colorado, net operating losses, military income,
wage adjustments, repayments for which IRC
section 1341 credits were claimed,

However, there is an April 2021 legislative analysis which seems to indicate that a deduction was allowed at that time.  This might have been prepared for legislation that then repealed it.  Colorado does not make it easy to research its statutes online.  Also, the repeal might have been effective for 2023 but not 2022.  You might want to call the CDOR to try to find an old-timer who might remember. 

https://leg.colorado.gov/sites/default/files/2021_te9_previously_taxed_income_deduction_individuals_... 

[Avs19]

Colorado is beautiful! I can't picture myself living anywhere else.

After gathering some more info from my client, it makes sense to take the deduction. Although, I do find it strange that they won't offer the credit.

Thanks for the link. Hopefully you'll get a chance to return sometime. Avoid 25 during ski season if you don't like traffic