Income Tax Topics: Child Care Credits                                           

Colorado resident individuals may be allowed one of two          Income limitations 
credits  on  their  Colorado  income  tax  return  for  child 
care expenses they pay during the tax year: the child 
                                                                 An individual may claim either a child care expenses credit 
care  expenses  credit  and  the  low-income  child  care 
                                                                 or a low-income child care expenses credit only if their 
expenses  credit.  Among  other  requirements  and 
                                                                 federal adjusted gross income (AGI) does not exceed the 
restrictions, the  credits are allowed only to taxpayers 
                                                                 application limitation, reflected in the following table:  
whose  federal  adjusted  gross  incomes  do  not  exceed 
certain limitations. Additionally, the credits are allowed 
                                                                   Maximum allowable AGI for each credit 
only for expenses paid for children under the age of 13. 
Both  Colorado  credits  are  refundable.  If  the  credit 
allowed  exceeds  the  taxpayer’s  Colorado  tax  liability,     Credit                              AGI Limitation 
the excess credit is refunded to the taxpayer. 
                                                                 Child care expenses credit          $60,000 
This publication is designed to provide general guidance 
                                                                 Low-income child care 
regarding child care credits and to supplement guidance                                              $25,000 
                                                                 expenses credit 
provided in the Colorado Individual Income Tax Guide. 
Nothing  in  this  publication  modifies  or  is  intended  to 
modify  the  requirements  of  Colorado’s  statutes  and         If a taxpayer’s AGI exceeds the limitations shown in the 
regulations. Taxpayers are encouraged to consult their           preceding table, they may not claim a Colorado credit 
tax advisors for guidance regarding specific situations.         for their child care expenses. 

This publication  provides information  about child care 
credits,  but  not  about  child  tax  credits.  Please  see     Eligible child care expenses 
Department  form  DR  0104CN  and  the  associated 
instructions for information about child tax credits.            The child care expenses credit and the low-income child 
                                                                 care  expenses  credit  are  allowed  only  for  qualified 
                                                                 expenses incurred for the care of children under the age 
Residency requirements                                           of 13. Neither credit is allowed for expenses incurred for 
                                                                 the  care  of a  taxpayer’s disabled  spouse  or  disabled 
Both the child care expenses credit and the low-income           dependent over the age of 12 or for any expenses for 
child care expenses credit are allowed only to Colorado 
                                                                 which  the  taxpayer  receives  reimbursement  from  the  
residents. An individual may qualify for a credit if they 
                                                                 Department of Early Childhood or from any other source. 
are either a full-year resident or part-year resident of 
                                                                 Additionally, the amount of child care expenses that can 
Colorado  for  the  tax  year.  Individuals  who  are  not 
                                                                 be considered in calculating the credit are limited to: 
Colorado residents are not eligible for either tax credit. 
See Part 1 of the Colorado Individual Income Tax Guide           ➢ In the case of an individual who files a single return, 
for additional information about Colorado residency. 
                                                                   the individual's earned income for the year; or  

                                                                 ➢ In the case of two individuals who file a joint 
Joint filing requirement                                           return, the lesser of either individual's earned 
                                                                   income for the year. 
Generally, married couples must file a joint return to claim 
either the child care expenses credit or the low-income child    Please  see  the  instructions  for IRS  Form  2441  and IRS 
expenses credit. Please see the instructions for IRS Form        Publication  503  for  additional  information  regarding 
2441  and IRS  Publication  503  for  additional  information    eligible child care expenses. 
regarding joint and separate filing for married couples. 
 
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                                                                                                     Revised January 2023 

Income Tax Topics: Child Care Credits 

Credit qualifications and calculation                           Low-income child care expenses credit 

While the child care expenses tax credit and the low-           The low-income child care expenses credit is allowed for 
income  child  care  expenses  tax  credit  are  largely        tax years 2018 and later. An individual must meet all of 
similar, the two credits have some different qualifying         the following requirements to qualify for the credit: 

criteria and are calculated using different formulas.           ➢ the individual ’sfederal adjusted gross income 
                                                                  (AGI) is $25,000 or less; 
Child care expenses credit  
                                                                ➢ the individual cannot claim a federal child care 
The Colorado child care expenses credit is allowed only           credit because they have no federal income tax 
to individuals who claimed and were allowed a federal             liability; and  
child care credit on their federal return. If the taxpayer 
                                                                ➢
could  not  claim  a  child  care  credit  on  their  federal     the individual would have been allowed to claim a 
return because they did not have any federal income tax           federal child care credit if they had a federal 
liability,  they  cannot  claim  a  Colorado  child  care         income tax liability.   
expenses credit, but they may be able to claim the low-
income child care expenses credit.                              A  taxpayer  who  meets  all  three  of  the  preceding 
                                                                conditions and the requirements described on page 1 of 
The  credit  is  calculated  as  a  percentage  of  the         this  publication  may  claim  the  low-income  child  care 
taxpayer’s  federal  child  care  credit  for  the  same  tax   expenses credit. The credit is equal to 25% of the eligible 
year.  For  tax  years  2019  and  later,  the  child  care     child  care  expenses,  as  described  earlier  in  this 
expenses credit is equal to 50% of the federal child care       publication, but cannot exceed the limits appearing in the 
credit  the  taxpayer  claimed  and  was  allowed  for  the     following table, based on whether the credit is claimed 
same  tax  year.  For  tax  years  2018  and  prior,  the       for child care provided to one or more children. 
percentage  used  to  calculate  the  Colorado  child  care 
credit was based upon the taxpayer’s federal adjusted           Maximum Low-Income Child Care Expenses Credit 
gross  income  (AGI)  for  the  tax  year.  The  applicable 
percentages for tax years 2018 and prior appear in the 
following table.                                                Children receiving care  Maximum allowable credit 

                                                                One child                           $500 
  Credit Calculation for Tax Years 2018 And Prior 
                                                                Two or more children                $1,000 

 Taxpayer’s AGI    Credit percentage 
                                                                Part-year residents 
                   50% of the federal child care 
 $25,000 or less 
                   credit 
                                                                Any child care expenses credit or low-income child care 
 More  than  $25,000,  30% of the federal child care            expenses  credit  claimed  by  a  part-year  resident  of 
 but less than $35,000  credit                                  Colorado must be computed as described above and then 
 More  than  $35,001,  10% of the federal child care            apportioned  by  multiplying  the  credit  amount  by  the 
 but less than $60,000  credit                                  percentage on line 34 of their Colorado Form 104PN or 
                   No       Colorado        child care          100%, whichever is less. 
 More than $60,000 
                   expenses credit is allowed 

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Income Tax Topics: Child Care Credits 

Claiming Colorado child care credits                            State statutes and regulations 

                                                                ➢ § 39-22-119, C.R.S. Expenses related to child care 
To claim either a child care expenses credit or a low-
                                                                  – credits against state tax. 
income child care expenses credit, a taxpayer must file 
a Colorado Individual Income Tax Return (DR 0104) with          ➢ § 39-22-119.5, C.R.S. Child care expenses tax credit. 
all of the following attachments: 
                                                                ➢ Rule 39-22-119. Child care expenses tax credit. 
 1) Individual Credit Schedule (Form 104CR), 
                                                                ➢ Rule 39-22-119.5. Low-income child care expenses 
 2) Child Care Expenses Tax Credit (DR 0347), and                 tax credit. 

 3) a copy of IRS Form 2441.                                    ➢ 26 U.S.C. § 21. Expenses for household and 
                                                                  dependent care services necessary for gainful 
For electronically filed returns, a scanned copy of  IRS          employment. 
Form 2441 can be submitted either via e-file or by using 
the E-Filer      Attachment   function       online at          ➢ 26 CFR § 1.21-1. Expenses for household and 
Colorado.gov/Revenue Online.                                      dependent care services necessary for gainful 
                                                                  employment. 

                                                                ➢
Refund for excess credit                                          26 CFR § 1.21-2. Limitations on amount creditable. 

                                                                ➢ 26 CFR § 1.21-3. Special rules applicable to 
If the amount of the child care expenses credit or the 
                                                                  married taxpayers. 
low-income  child  care  credit  exceeds  the taxpayer’s 
Colorado tax liability, the excess credit will be refunded      ➢ 26 CFR § 1.21-4. Payments to certain related 
to the taxpayer.                                                  individuals. 

                                                                Forms and guidance 
Additional resources 

                                                                ➢ Tax.Colorado.gov 
The following is a list of statutes, regulations, forms, and 
guidance pertaining to Colorado child care credits. This        ➢ Colorado Individual Income Tax Guide 
list is not, and is not intended to be, an exhaustive list 
of  authorities  that  govern  the  tax  treatment  of  every   ➢ Child Care Expenses Tax Credit (DR 0347) 
situation.  Individuals  and  businesses  with  specific 
questions should consult their tax advisors.                    ➢ Individual Credit Schedule (DR 0104CR) 

                                                                ➢ IRS Form 2441  – Child and Dependent Care Expenses 

                                                                ➢ IRS Publication 503  –Child and Dependent Care 
                                                                  Expenses 

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