Unemployment taxable in CO

The State of Colorado has issued guidance to taxpayers about how it's handling the tax laws enacted last week. Though unemployment income received that totaled $10,200 or less is NOT taxable in most cases by the IRS, Colorado says it wants its share of the pie and IS taxing unemployment income.


Our state's income tax statutes don't incorporate retroactive federal statutory changes enacted after the last day of a taxable year so last week's tax act won't impact state income tax returns for 2020.


If you've already filed a State of Colorado Income Tax Return and included all of your unemployment income in your taxable income, you don't need to do anything at all with your STATE return. Your federal return may need to be amended, however. It all depends on how much unemployment income you received and whether your Adjusted Gross Income is over or under $150,000.


If you haven't filed your income tax returns (Federal or State): While the first $10,200 of unemployment income is not taxable in most cases by the IRS, it is taxable by the State of Colorado. The State says the amount of unemployment should be added to Line 6 (other additions) of the Colorado Individual Income Tax Return, along with any other addbacks you may be required to report. In the explanation field, enter 'Unemployment Compensation'.

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