Colorado law establishes an alternative minimum tax (AMT) for individuals, estates, and trusts, but not for corporations. Colorado AMT is based largely on factors used in determining federal AMT, making it likely that a taxpayer who owes federal AMT will also owe Colorado AMT. The Colorado AMT is in addition to the normal Colorado income tax a taxpayer owes and is equal to the amount by which the tentative minimum tax exceeds the normal tax. Taxpayers who owe Colorado AMT must prepare certain state and federal forms in order to calculate any Colorado AMT due.
CALCULATING COLORADO ALTERNATIVE MINIMUM TAX
Colorado AMT for individual taxpayers is calculated using the Colorado Alternative Minimum Tax Computation Schedule (104AMT) and is based upon federal alternative minimum taxable income determined with IRS Form 6251. First, a taxpayer’s federal alternative minimum taxable income is reduced by the applicable federal exemption (see IRS Form 6251 to determine the applicable exemption amount) and modified by any applicable Colorado additions and subtractions in order to determine Colorado alternative minimum taxable income. Then, Colorado tentative minimum tax is calculated at 3.47% of Colorado alternative minimum taxable income. Finally, Colorado alternative minimum tax is calculated by subtracting the taxpayer’s normal Colorado income tax from the taxpayer’s tentative Colorado minimum tax. If a taxpayer’s tentative Colorado minimum tax is less than their normal Colorado income tax, the taxpayer owes no Colorado AMT. See 104AMT for additional information regarding this calculation. Colorado AMT for estates and trusts is calculated in a similar manner using Fiduciary Alternative Minimum Tax Computation Schedule (Schedule F – DR 0105) and the federal Schedule I of Form 1041.