Colorado Form DR 0104AD, the Subtractions from Income Schedule, is the attachment to your DR 0104 individual income tax return where you list the income items Colorado lets you subtract from your federal taxable income before the state’s 4.40% flat rate applies. Every dollar you correctly claim on this schedule directly reduces what Colorado taxes. You file it with your DR 0104 whenever you have any subtraction to claim.1Department of Revenue – Taxation. DR 0104AD – Subtractions from Income Schedule
How the Schedule Works
The form has 21 numbered lines, each tied to a specific type of subtraction. You enter dollar amounts on the lines that fit your situation, total everything on line 22, and carry that total to line 11 of your DR 0104.2Colorado Department of Revenue. DR 0104AD – Subtractions from Income Schedule Your name and SSN or ITIN go at the top of each page so the Department of Revenue can match the schedule to your return. Joint filers list both taxpayers.
Some lines apply only to the primary taxpayer while separate lines cover a spouse, so the right amount on the right line matters. The Department of Revenue’s automated systems flag mismatches between your DR 0104AD subtotal and the corresponding entry on the DR 0104.3Department of Revenue – Taxation. Save Money
Retirement Income Subtractions
Retirement income is where most Colorado filers see the largest subtractions. Social Security and pension income sit on different lines, and both are age-sensitive.
Social Security Benefits
If you are 65 or older by year-end, you can subtract the full amount of Social Security benefits included in your federal taxable income. No cap, no income limit.4Department of Revenue – Taxation. Income Tax Topics – Social Security, Pensions and Annuities
Beginning with tax year 2025, taxpayers aged 55 to 64 can also subtract all of their federally taxed Social Security benefits if their adjusted gross income is under $75,000 (single) or $95,000 (joint). Above those thresholds the subtraction is capped at $20,000.4Department of Revenue – Taxation. Income Tax Topics – Social Security, Pensions and Annuities Social Security goes on line 3 for the primary taxpayer and line 5 for a spouse.2Colorado Department of Revenue. DR 0104AD – Subtractions from Income Schedule
Pensions, Annuities, and IRA Distributions
A separate subtraction covers pension, annuity, IRA, and disability income other than Social Security Disability, which is claimed on the Social Security line. Taxpayers aged 55 to 64 can subtract up to $20,000. At 65 and older, the cap is $24,000.5Legal Information Institute. Colorado Code 39-22-104(4)(f) – Pension and Annuity Subtraction Qualifying income includes 401(k), 403(b), and IRA distributions along with government pensions.6Department of Revenue – Taxation. Information for Retirees Use line 4 for the primary taxpayer, line 6 for a spouse.
The pension and Social Security subtractions are independent. A 65-year-old drawing both can subtract all Social Security plus up to $24,000 of pension income.
Military Pay and Retirement
Lines 7 and 8 handle military retirement benefits for taxpayers under age 55. At 55 or older, military retirement moves to the pension and annuity lines (4 or 6) because it qualifies under those broader rules.2Colorado Department of Revenue. DR 0104AD – Subtractions from Income Schedule If you claim on line 7 or 8, attach copies of all your 1099-R statements.
Line 17 addresses active duty service members who reacquired Colorado residency during the tax year. Active duty compensation included in federal taxable income can be subtracted.7Department of Revenue – Taxation. Active Duty Servicemembers Combat zone pay already excluded federally isn’t taxed by Colorado either, so there’s nothing extra to subtract for that.
Other Subtractions People Commonly Miss
State Tax Refunds on Your Federal Return
Line 1 subtracts state tax refunds, credits, or offsets reported as income on your federal return (Schedule 1, line 1). If you itemized last year and received a Colorado refund that the IRS treated as income, Colorado does not tax it back.2Colorado Department of Revenue. DR 0104AD – Subtractions from Income Schedule
CollegeInvest 529 Contributions
Contributions to a CollegeInvest-administered 529 plan go on line 10. The account must be one offered through CollegeInvest, Colorado’s state-sponsored program. The subtraction has per-beneficiary caps that adjust annually, so check the current-year instructions or CollegeInvest for the limit.8Colorado Department of Revenue – Taxation. Income Tax Topics – CollegeInvest Contribution Subtraction Any contributor can claim it, not just a parent or guardian.
Charitable Contributions if You Take the Standard Deduction
Non-itemizers who give to charity get a subtraction on line 12 for total qualifying contributions above $500 in the year. Only the amount over $500 counts.9Department of Revenue – Taxation. Charitable Contributions Tax Benefits The same qualification rules as the federal deduction under IRC ยง 170 apply.10Legal Information Institute. Colorado Code 39-22-104(4)(m) – Charitable Contribution Subtraction for Taxpayers Many filers who take the standard deduction assume there’s no state benefit for giving. There is.
FAMLI Benefits
Line 19 covers Family and Medical Leave Insurance benefits included in your federal taxable income. If you drew FAMLI paid leave and it shows up federally, subtract it here.2Colorado Department of Revenue. DR 0104AD – Subtractions from Income Schedule
Gone: First-Time Home Buyer Savings Account
Older versions of the form allowed a subtraction for interest earned in a first-time home buyer savings account. That subtraction ran from 2017 through 2024 and is not available for tax year 2025 or later.11Department of Revenue – Taxation. Income Tax Topics – First-Time Home Buyer Savings Account Subtraction Ignore references to it in older instructions.
Part-Year Residents and Nonresidents
You still claim subtractions on the DR 0104AD if you lived in Colorado only part of the year or earned Colorado-source income as a nonresident. Colorado tax is first calculated as if you were a full-year resident, subtractions included, and then apportioned based on the share of income actually subject to Colorado tax.12Department of Revenue – Taxation. Income Tax Topics – Part-Year Residents and Nonresidents The apportionment happens on Form 104PN, which you file along with the DR 0104 and DR 0104AD. Enter the subtractions on the DR 0104AD regardless of whether they relate to Colorado-source income; the 104PN allocates.
Records to Keep
Every subtraction should be backed by a third-party document. Pension and Social Security subtractions rely on 1099-R and SSA-1099 forms. CollegeInvest contributions are supported by year-end account statements. Charitable contributions need receipts or written acknowledgments from the recipient organization. Military retirement claimed on line 7 or 8 requires you to attach copies of all 1099-R statements to your return.2Colorado Department of Revenue. DR 0104AD – Subtractions from Income Schedule
Colorado requires you to keep records for at least four years after the return’s due date or the date you paid the tax, whichever is later.13Justia. Colorado Code 39-21-113 – Reports and Returns – Rule Digital copies work as long as the amounts are legible. If the Department of Revenue audits and you can’t produce support, the subtraction is disallowed and you owe the tax plus interest.
Filing the Form
You don’t file the DR 0104AD by itself. It attaches to your DR 0104. Filing through the Department of Revenue’s free Revenue Online portal cuts down on processing errors and gives you confirmation of receipt.3Department of Revenue – Taxation. Save Money Paper returns run about three months to process; electronic returns take three to five weeks.14Department of Revenue – Taxation. Refund
The return is due April 15. Colorado grants an automatic six-month extension to October 15 with no form required, but the extension covers filing only.15Department of Revenue – Taxation. Individual Income Tax – Due Dates and Filing Extension You still need to pay at least 90% of your tax liability by April 15 to avoid penalties. Your DR 0104AD follows the same deadline as the DR 0104 and goes in with the return whenever you submit it.
Fixing a Subtraction After the Fact
If you missed a subtraction, entered the wrong amount, or put an item on the wrong line, the fix is an amended return on Form DR 0104X with a corrected DR 0104AD attached.16Department of Revenue – Taxation. DR 0104X – Amended Individual Income Tax Return The Department of Revenue recommends filing amendments through Revenue Online when possible.
What Happens if a Subtraction Is Disallowed
Claiming a subtraction you don’t qualify for, or overstating one, produces additional tax plus interest. Colorado charges a discounted interest rate if you pay before receiving a notice of deficiency or within 30 days of receiving one; miss that window and the rate rises.17Colorado Department of Revenue – Taxation. Tax Topics – Penalties and Interest Interest accrues daily from the original due date, so the sooner a mistake is fixed, the less it costs. Paying promptly after you spot an error, even before the state raises it, is the cheapest resolution.