I HOPE I am misunderstanding this... Colorado now limits tax deductions!!????

Tax, SDIRAs & Cost Segregation
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I HOPE I am misunderstanding this... Colorado now limits tax deductions!!????

Zoey W.
Member since 2023 · 19 posts · 1 vote

I hope I am misunderstanding this regarding new tax law in Calirado... sorry I meant Colorado....

"Effective January 1, 2023, single filers are limited to $12,000 and joint filers are limited to $16,000 of deductions. The current standard deduction in Colorado is $12,950 for singles and $25,950 for joint filers. As such, all individuals with incomes over $300,000 will be subject to deduction limitations.

So if a business or landlord has legitimate write offs for their rental properties (for example) Colorado will NOT allow more than 12k or 16k of legal and LEGITIMATE deductions just because that person earns 300k per year?

https://www.withum.com/resources/colorado-state-tax-updates/#:~:text=Effective%20January%201%2C%202023%2C%20single,be%20subject%20to%20deduction%20limitations.

That is INSANITY!!! 


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Randall Tannen
CPA | Accepting New Clients · Member since 2022 · 62 posts · 36 votes
3y
Quote from @Zoey W.:

I hope I am misunderstanding this regarding new tax law in Calirado... sorry I meant Colorado....

"Effective January 1, 2023, single filers are limited to $12,000 and joint filers are limited to $16,000 of deductions. The current standard deduction in Colorado is $12,950 for singles and $25,950 for joint filers. As such, all individuals with incomes over $300,000 will be subject to deduction limitations.

So if a business or landlord has legitimate write offs for their rental properties (for example) Colorado will NOT allow more than 12k or 16k of legal and LEGITIMATE deductions just because that person earns 300k per year?

https://www.withum.com/resources/colorado-state-tax-updates/#:~:text=Effective%20January%201%2C%202023%2C%20single,be%20subject%20to%20deduction%20limitations.

That is INSANITY!!! 


It's a cap on itemized or standard state income tax deductions for those earning over $300k. It doesn't impact rental expenses.

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  • Randall Tannen
    CPA | Accepting New Clients · Member since 2022 · 62 posts · 36 votes
    3y
    Quote from @Zoey W.:

    I hope I am misunderstanding this regarding new tax law in Calirado... sorry I meant Colorado....

    "Effective January 1, 2023, single filers are limited to $12,000 and joint filers are limited to $16,000 of deductions. The current standard deduction in Colorado is $12,950 for singles and $25,950 for joint filers. As such, all individuals with incomes over $300,000 will be subject to deduction limitations.

    So if a business or landlord has legitimate write offs for their rental properties (for example) Colorado will NOT allow more than 12k or 16k of legal and LEGITIMATE deductions just because that person earns 300k per year?

    https://www.withum.com/resources/colorado-state-tax-updates/#:~:text=Effective%20January%201%2C%202023%2C%20single,be%20subject%20to%20deduction%20limitations.

    That is INSANITY!!! 


    It's a cap on itemized or standard state income tax deductions for those earning over $300k. It doesn't impact rental expenses.

    1Reply
  • Zoey W.
    OP
    Member since 2023 · 19 posts · 1 vote
    3y
    Quote from @Randall Tannen:
    Quote from @Zoey W.:

    I hope I am misunderstanding this regarding new tax law in Calirado... sorry I meant Colorado....

    "Effective January 1, 2023, single filers are limited to $12,000 and joint filers are limited to $16,000 of deductions. The current standard deduction in Colorado is $12,950 for singles and $25,950 for joint filers. As such, all individuals with incomes over $300,000 will be subject to deduction limitations.

    So if a business or landlord has legitimate write offs for their rental properties (for example) Colorado will NOT allow more than 12k or 16k of legal and LEGITIMATE deductions just because that person earns 300k per year?

    https://www.withum.com/resources/colorado-state-tax-updates/#:~:text=Effective%20January%201%2C%202023%2C%20single,be%20subject%20to%20deduction%20limitations.

    That is INSANITY!!! 


    It's a cap on itemized or standard state income tax deductions for those earning over $300k. It doesn't impact rental expenses.


    Forgive me because I am still confused... so if someone has a business (such as an online ecommerce business, not rental properties) and they earn 300k from their online ecom business they CANNOT deduct more than 12k in itemized expenses? That is INSANE. Is it mostly Colorado doing this? 

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Zoey W.

    I don’t think that’s what they are referring to. It’s standard deductions like property tax, donations etc that are itemized and deducted

    Business expenses are not deductions

    Not a cpa but ask yours

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    3y

    Imagine you are a car dealer or an RV dealer, or Walmart. As mentioned, expenses aren’t deductions. You pay taxes on your income after expense requird to make that income. They just don’t like people being taxed to death in their state to deduct those taxes from their income. 

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