Schedule PC: Pass-Through Credits (2024)
Alabama · Alabama DOR · Used for tax years 2024
Alabama Schedule PC reports pass-through tax credits and is attached to Form 20S or 65. It calculates allowable credits for listed activities and expenses, including certain credits received through Schedule K-1.
Who files this form
Schedule PC reports pass-through credits and is attached to Form 20S or Form 65. The 2024 schedule includes instructions for S corporations and Subchapter K entities to report credits used against tax and credits allocated to owners.
What you'll need
Use the name and federal employer identification number shown on Form 20S or Form 65. Depending on the credits you claim, gather these documents:
- Enterprise Zone Act Credit: Attach Schedule EZ. The credit amount comes from Schedule EZK1, Part II, page 2, line 13, or Schedule EZ, Part IV, page 2, line 13.
- Basic Skills Education Credit: Attach the approved certification notice from the Alabama Department of Education.
- Full Employment Act Credit: Attach an itemized list of qualified employees.
- Qualified Irrigation System/Reservoir System Credit: Attach supporting documentation.
- 2013 and 2017 Historic Rehabilitation Credits: Have the project tax credit certificates and attach supporting documentation.
- Career-Technical Dual Enrollment Credit: Attach the approved certification from the Department of Postsecondary Education.
- Investment Credit and Port Credit: Attach the approved certification from the Department of Commerce.
- Apprenticeship Tax Credit: Use the Alabama Apprenticeship Tax Credit Certificate.
- Railroad Modernization Credit: Use the Department of Commerce Certificate.
- Income Tax Capital Credit: Attach Form KRCC when checking the KRCC received or KRCC issued box.
For lines reporting a share of credit from Schedule K-1, have the K-1 and the entity's FEIN. Where the form directs, attach a schedule if the credit comes from more than one entity.
How to file
- Submit pass-through credits marked with an asterisk through My Alabama Taxes (MAT) before completing Schedule PC. The form refers to instructions for submission details.
- Complete the applicable credit parts and the summary in Part T.
- Attach Schedule PC to Form 20S or Form 65, along with the required supporting documents.
For the Income Tax Capital Credit in Part S, the form also requires filing AR-PTE on MAT, checking the applicable KRCC box, and attaching Form KRCC.
The provided form text does not give a mailing address or instructions for electronically filing the completed return.
Common mistakes
- Completing Schedule PC before the required MAT submission. The asterisked reminder says pass-through credits must be submitted through MAT first.
- Missing required attachments. Several credit parts expressly require certifications, supporting documentation, or an employee list.
- Ignoring the stop rule in Part D. If line 3 is zero or less, the form says to stop because you do not qualify for the Full Employment Act Credit.
- Using foreign currency in Part I. All dollar figures must be in U.S. dollars.
- Reporting the foreign-country tax credit on nonresident K-1s. Part I says the amount applicable to nonresident owners should not be reported on their K-1s.
- Using credits above the Form 20S tax limit. Credits used in Part T, line 3, cannot exceed the tax liability on Part T, line 2.
Questions people ask
How is the Basic Skills Education Credit calculated?
Part B asks whether participants were continuously employed by you for at least 16 weeks and worked at least 24 hours each week. If both answers are yes, enter the total expenses available for credit on line 6. Multiply that amount by 20% to calculate line 7.
Where do credits used against Form 20S tax go?
Add Part T, lines 3a through 3j, and enter the total on line 4. Transfer that amount to Form 20S, page 1, line 33.
Which credits are included in the refundable-credit total?
Part T, line 8, adds line 6 for the 2017 Alabama Historic Rehabilitation Tax Credit and line 7 for the Railroad Modernization Act of 2019 credit. Lines 6 and 7 give separate calculations for S corporations and Subchapter K entities.
Where do I report credits allocated to owners?
In Part T, subtract total refundable credits on line 8 from remaining credits allowable on line 5. Enter the result on line 9 and on Schedule K, line 21.