To claim certain Alabama income tax credits, you must complete Schedule OC. Many credits also require a credit claim, reservation, certification, or other approval through My Alabama Taxes (MAT) before the credit can be reported on your return. Review the instructions for the specific credit you're claiming to determine whether pre-certification is required.
Innovate Alabama Credit Carryforward
The Innovate Alabama Credit may allow an unused portion of the credit to be carried forward, subject to the limitations provided in the credit’s governing statute and Alabama Department of Revenue instructions.
- Any unused credit may generally be carried forward for up to 5 taxable years, if allowed under the credit rules in effect for the tax year.
- The allowable carryforward amount is limited to the portion of the credit not used in the current tax year after applying applicable credit limitations.
- The credit is computed using the credit-specific worksheet and then transferred to Schedule OC when applicable for reporting purposes.
Growing Alabama Credit Carryforward
The Growing Alabama Credit may also allow an unused portion of the credit to be carried forward, subject to statutory and administrative limitations.
- Any unused credit may generally be carried forward for up to 5 taxable years, if permitted under the credit’s governing provisions.
- The allowable carryforward is limited to the unused portion of the credit after application against current-year Alabama tax liability and any applicable credit limitations.
- The credit computation is completed on the credit-specific schedule, and the allowable amount is reported on Schedule OC when required.
Reporting on Schedule OC
- Schedule OC is used to report certain credits available to the taxpayer, including allowable carryforward amounts from prior years when required by the instructions.
- Credit-specific schedules and worksheets must be completed first to determine the correct allowable carryforward amount before reporting on Schedule OC.
- Taxpayers must ensure that the total credit claimed does not exceed the limitations imposed by Alabama law for the applicable credit type.
Source:
Schedule OC Instructions (Alabama Department of Revenue)
Disclaimer: Always verify details with the most current Federal or State Department of Revenue Forms and Instructions. Tax rules may change annually, and professional advice from a CPA or tax attorney is recommended for complex situations.