Schedule OC: Other Available Credits (Form 40 or 40NR) (2024)

Who files this form

Use Schedule OC with your 2024 Alabama Form 40 or Form 40NR to report the credits listed on the schedule, including applicable prior-year credit carryforwards. Attach Schedule OC to your return.

The schedule covers credits for education, employment, business investment, adoption, historic rehabilitation, and other listed activities.

Two credits are marked Form 40 only:

• Part A: Credit for Taxes Paid to Other States.
• Part I: Credit for Taxes Paid to a Foreign Country.

Several parts also provide lines for owners to report their share of an entity's credit from Schedule K-1.

What you'll need

Have your Form 40 or Form 40NR available, along with the documents for the credits you are claiming. These may include:

• Related schedules: Schedule CR for taxes paid to other states; Schedule EZK1 or EZ for the Enterprise Zone credit; Schedule AATC for the School Transfer Credit; and Schedule AAC for the Adoption Tax Credit.
• Schedule K-1 and entity information: For credits passed through from an entity, the form asks for your share of the credit and the entity's FEIN. Where directed, attach a schedule if the credit comes from more than one entity.
• Credit certificates: Applicable tax credit or transfer credit certificates for credits such as historic rehabilitation, career-technical dual enrollment, railroad modernization, storm shelters, volunteer responders, and preceptors.
• Credit-specific information: Employee counts and service information, qualifying costs or expenses, contribution amounts, project numbers, and dates placed in service, as requested in the applicable part.

The form expressly requires these attachments for the following credits:

• Basic Skills Education: A copy of the approved certification notice from the Alabama Department of Education.
• Port Credit: A copy of the Certification of Port Credit from the Alabama Department of Commerce.
• Apprenticeship Credit for a sole proprietor: A copy of the Alabama Apprenticeship Tax Credit Certificate.
• Income Tax Capital Credit: Form KRCC and Schedule KRCC-I.

How to file

Attach Schedule OC to your 2024 Form 40 or Form 40NR.

1. Submit credits marked with an asterisk through My Alabama Taxes (MAT) before completing Schedule OC. The form refers to the instructions for submission details, but no instructions were provided here.
2. Enter your name as shown on your return and your Social Security number. In Section A, enter the tax from Form 40, page 1, line 17, or Form 40NR, page 1, line 19.
3. Complete the applicable credit parts in Section B and transfer the amounts to the indicated columns in Section C. The Section C pages state that they can only be submitted or printed in landscape orientation.
4. Report applicable prior-year credit carryforwards in Section D and calculate net tax due in Section E.
5. Transfer Section E, line E5, to Form 40, page 1, line 18, or Form 40NR, page 1, line 20. Transfer total refundable credits from Section F, line F4, to page 1, line 25 of either return.

The supplied form does not give a mailing address or instructions for electronically filing the completed return.

Common mistakes

• Skipping the MAT submission: Credits marked with an asterisk must be submitted through My Alabama Taxes before you complete Schedule OC.
• Leaving out required certificates: The form requires certification attachments for Basic Skills Education and Port credits. For a sole proprietor claiming the Apprenticeship Credit, it expressly says no credit will be allowed without the certificate copy.
• Selecting both direct-credit options in Part J: You cannot select both irrigation system purchase or conversion and reservoir construction. You may select the pro rata share option in addition to either one.
• Using foreign currency in Part I: All dollar figures must be in U.S. dollars.
• Ignoring Part F's stop rule: If line F3 is zero or less, stop. The form says you do not qualify for the Full Employment Act credit.
• Printing the Section C pages in portrait orientation: These pages require landscape orientation.

Questions people ask

Can I use Schedule OC with Form 40NR?

Yes. The form says to attach it to Form 40 or Form 40NR. However, Part A for taxes paid to other states and Part I for taxes paid to a foreign country are marked for Form 40 only.

Can unused credits be carried forward?

Certain credits can. The form lists maximum carryforward periods of 3 years for the Scholarship Granting Organization and Career-Technical Dual Enrollment credits; 5 years for the irrigation/reservoir, Alabama Jobs Act Investment, Port, Growing Alabama, and Innovate Alabama credits; and 10 years for the 2013 Historic Rehabilitation credit. Section D reports prior-year carryforwards.

Which credits are included in the refundable credit calculation?

Section F includes the School Transfer Credit, Alabama Adoption Tax Credit, and 2017 Alabama Historic Rehabilitation Tax Credit. For each, subtract the current credit applied from the current credit allowable. Add the results and enter the total on page 1, line 25 of Form 40 or Form 40NR.

How much is the Rural Physician Credit shown on this form?

Part D directs qualifying physicians to enter $5,000. If you are married filing jointly and both spouses qualify, it directs you to enter $10,000.

Official sources

• https://www.revenue.alabama.gov/wp-content/uploads/2025/01/24f40schocblk.pdf