VERIFY – YOU’VE GOT QUESTIONS, WE’LL FIND ANSWERS
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Brad Lewis called the Verify team because his tax bill from the state of Colorado shocked him. He thought he’d be getting $1,600 back, but he got a bill for nearly $500 instead.
Lewis is active duty military. He’s stationed in Virginia, but he’s always kept his Colorado residency.
And that’s where the confusion starts.
State lawmakers passed a bill in 2015 that would essentially exempt active duty military members from Colorado income taxes.
Lewis thought that was great and asked the Navy to stop withholding state income taxes from his paychecks.
Everything seemed great until he got the bill from the Colorado Department of Revenue.
That’s when he first heard that the new law didn’t apply to all active duty military members just a select few.
Lewis called us, and we started calling lawmakers and state agencies.
WHAT WE FOUND
The verify team spoke with state Sen. Larry Crowder, (R-Alamosa County), who sponsored the law in the Senate and Lynne Granger, spokesperson for the Department of Revenue.
Here’s what we found:
The law is called the “Honoring Our Military Exemption” or HOME subtraction, and it provides “three types of tax relief for qualified taxpayers,” Granger said.
- Colorado residents who are active duty military can deduct their military pay from their total amount of state taxable income.
- They can also ask the military to stop withholding state taxes from their paychecks.
- If their own source of income is military income, they don’t have to file a Colorado tax return.
That sounds like Lewis should qualify, but there’s a catch.
The law only applies to service members who changed their residency to Colorado after Jan. 1, 2016.
Lewis can’t use the deduction because he remained a Weld County resident for his entire 28 years of military service.
“Here’s what he can do,” Crowder said. “He can change his home base to Virginia and change it back to Colorado and then he can get a little bit of a tax break.”
That struck Lewis as slightly ridiculous. He’d have to spend the time and money to change his car registration and driver’s license twice.
“I’m being punished for not switching my registration to Florida when I was in boot camp because they are state tax free,” Lewis said.
Thirty states in the U.S. either don’t have a state income tax or excuse active duty military from paying it.
The HOME subtraction was supposed to add Colorado to that list.
But the law hasn’t worked out the way Lewis or Crowder thought it would.
“Had I known at the time the results of it, I probably would not have done it,” Sen. Crowder said. “The benefit is very little, and it does penalize those who kept Colorado as their home.”
If you’re a Colorado resident who is also active duty military, the only way to qualify for this tax break is to change your residency to another state and then change it back.
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