The Department of Revenue requires proof in the form of a Colorado driver's license or Colorado ID number, a signed lease agreement showing full-year residency, or utility bills for the first and last months of 1998. The amount of a person's refund is based on 1998 federal adjusted gross income. Federal adjusted gross income is a person's income before personal exemptions and deductions. This income measure includes wages, interest, dividends, alimony received, business income, capital gains, unemployment compensation, taxable IRA distributions, taxable social security income, farm and rental income, and for taxpayers who itemize deductions, state income tax refunds. Federal adjusted gross income is reduced by certain adjustments such as IRA deductions, alimony paid, moving expenses, and contributions for a Keogh and self-employed SEP plan.
Most taxpayers can claim the refund by filing a state income tax return.
Eligible Colorado residents who do not file a federal income tax return because their incomes are too low or who have no income should insert a zero on the line for federal adjusted gross income. The state tax forms will be available at the end of 1998. The state will begin processing refunds on January 4, 1999. Last year, these taxpayers had to file for the sales tax refund on the state income tax return. All Colorado residents who are eligible for the sales tax refund must file a 1998 state income tax return or a form for the claim for the property tax assistance grant or heat or fuel expenses assistance grant by April 15, 1999.