2020 Unemployment Compensation Exclusion Refund Information
This new blog is to help keep PASC members timely informed about current accounting and tax related news and issues as they come to our attention.
Many thanks to new PASC member Tom Kaper (Triser, Bussey & Kapaer, CPAs LLC) who called from Grand Junction to let us know about a lawsuit that the CO DOR (Department of Revenue) lost about having to add back the CO Unemployment to the CO returns in 2020 because of the federal retroactive tax law change in March 2021. See the CO DOR announcement and the CO DOR 2020 Unemployment Compensation Exclusion instructions
Amber Egbert, Director of Research & Legislative Services in the Taxation Division at CO DOR, suggests that due to the recent legislative changes and their current resource constraints any automation of a refund process for the unemployment add back refunds is unlikely to be timely. If the taxpayer has, or creates, a CO DOR account they can amend the 2020 return for free to get their refund. Some tax prep software offers CO e-filed amendments for 2018 and later returns. Alternatively, a paper filed 2020 CO amended return will work.
My firm is using our tax software data mining tool to find and inform the 25% of our clients who need to make these amendments. We are updating our websites and social media to share this information, especially for those who wish to go to directly to the CO DOR website and file their amended 2020 CO return for free before May 17, 2025 from their CO Revenue On-line account. Of course, we will be, for a nominal fee, helping those who request our assistance. A refund of up to $464 per unemployed person will likely be very much appreciated by our clients.