Colorado Tax Deduction

Q: Line 2 of the Colorado income tax return (Form 104) requires that the state income tax deduction taken on the federal return be added back to federal taxable income. Taxes are paid in more than one state, and the credit for income taxes paid to another state was taken on the Colorado return. Must the total of taxes paid to all states must be included on line 2 of the Colorado return, or is it only the Colorado income tax paid that must be added back?

A: -The state income tax (from all states)that was deducted on the federal return is added back to the extent that it does not reduce your federal itemized deductions below the standard deduction. -It is only the Colorado withholding that is added back. It is also only if you Itemized on your federal return (Sch. A), if you took the standard deduction,

you do not need to add anything back. This is all because Colorado starts with Federal TAXABLE income not AGI as most calculations do. Then CO must reconstruct to create CO Taxable, adding things you deducted on the Sch. A that CO does not. Also having additional subtractions. Sue E. -It's the total of tax paid to all states, adjusted for the 3% phaseout of itemized deductions and the standard deduction (or twice the single standard deduction for married couples filing a joint return) to the extent these apply. If you are filing a nonresident or part-year resident return, Form 104PN allocates the tax as though you were a full-year resident to the Colorado income .