Good News: Colorado TABOR Refunds Won’t Be Taxed By IRS
When it comes to taxes, the news is seldom good, but here's a little good news to start your week.
Late last year, the state of Colorado sent out TABOR refunds to residents in the amount of $750 - a move mandated by state law. The law limits how much money the state can keep and spend each year. When limits are exceeded, the excess taxes collected are refunded to taxpayers.
The Government Giveth, and the Government Taketh Away
As absurd as it may have seemed, the IRS recently warned taxpayers in 19 states, including Colorado, that those TABOR refunds might be subject to federal income tax. Their advice was to hold off on filing income tax returns while they gathered more information.
Here's the Good News
The Colorado Department of Revenue has announced that Coloradans will not have to pay federal income tax on the TABOR refunds handed out last year in Colorado. Governor Jared Polis said he didn't believe the refunds should be taxed, and Colorado's congressional delegation sent a letter to the IRS arguing in defense of Colorado taxpayers.
Is Your Paycheck Going Up With the Cost of Living?
The last thing Coloradans need right now is more taxes. With the rising price of gas, groceries, and heating costs, paychecks are being stretched more than ever. Unfortunately, while the cost of living is raging out of control, for many Coloradans, that paycheck is staying the same and struggling to keep up.
So whether you have already spent your $750 TABOR refund or tucked it away for a rainy day, you can enjoy this bit of good news knowing that every penny of that refund is yours to keep. There's no guarantee that future refunds will be tax-free, but, at least this time, you don't have to give any of your refunds back.