Schedule PC: Pass-Through Credits (2025)
Alabama · Alabama DOR · Used for tax years 2025
Alabama Schedule PC reports pass-through tax credits and is attached to Form 20S or 65. It calculates allowable credits for activities such as employee education, hiring, historic rehabilitation, and qualifying contributions, and includes credits received through Schedule K-1.
Who files this form
Schedule PC reports pass-through credits and must be attached to Form 20S or Form 65. Use the applicable parts to report credits, then complete Part W to summarize credits used on Form 20S, refundable credits, and credits allocated to owners.
What you'll need
Have the name shown on Form 20S or Form 65 and the federal employer identification number (FEIN) ready. Depending on the credits you report, you will also need:
- Enterprise Zone Act Credit: Schedule EZ, which must be attached, and the credit amount from Schedule EZK1 or Schedule EZ.
- Basic Skills Education Credit: Your approved Alabama Department of Education certification notice, which must be attached, plus your certification number, provider information, employee information, and expenses available for credit.
- Full Employment Act Credit: An itemized list of qualified employees, which must be attached, and the employee counts requested in Part D.
- Irrigation/reservoir and historic rehabilitation credits: Supporting documentation, which must be attached. The historic rehabilitation parts also request information from tax credit certificates.
- Career-Technical Dual Enrollment Credit: Your approved Department of Postsecondary Education certification, which must be attached.
- Investment and Port credits: Approved Department of Commerce certifications, which must be attached. The Railroad Modernization credit also uses the amount on a Department of Commerce certificate.
- Workforce Housing Credit: The credit certificate issued by the Alabama Housing Finance Authority.
- Employer, Childcare Facility, and Employer Provider credits: The applicable credit certificate issued by the Department of Revenue.
- Income Tax Capital Credit: Form KRCC, which must be attached for the applicable KRCC received or issued box.
For credits received through Schedule K-1, have the K-1 and the issuing entity's FEIN. Where the form requests it, attach a schedule if the credit comes from more than one entity. Part I uses the foreign tax due shown on the foreign country's tax return.
How to file
- Submit credits marked with an asterisk through My Alabama Taxes (MAT) before completing Schedule PC. The form refers to instructions for submission details, but those instructions were not provided.
- Complete the applicable credit parts and the Part W summary. For the Income Tax Capital Credit, the form also requires filing AR-PTE on MAT.
- Attach the required supporting documents and attach Schedule PC to Form 20S or Form 65.
The provided text does not give a mailing address or instructions for electronically filing Schedule PC itself.
Common mistakes
- Completing Schedule PC before the required MAT submission. The form says credits marked with an asterisk must be submitted through MAT first.
- Leaving out required attachments. Attach the certifications, schedules, employee lists, and supporting documentation requested for your credits.
- Ignoring Part D's eligibility warnings. You do not qualify for the Full Employment Act Credit if you answer “No” to the question about being in business with 50 or fewer full-time and/or part-time employees on June 9, 2011. The form also says to stop if Part D, line 3 is zero or less.
- Claiming the business start-up credit despite a “No” answer. Part F says you do not qualify if the business did not start after April 2, 2012.
- Using foreign currency in Part I. All dollar figures must be in U.S. dollars. The credit applicable to nonresident owners should not be reported on nonresident K-1s.
- Using credits above the Form 20S tax liability. Credits used in Part W, line 3 cannot exceed the tax liability on Part W, line 2.
- Missing the capital credit requirements. Part V requires AR-PTE on MAT, the applicable KRCC box to be checked, and Form KRCC to be attached.
Questions people ask
Which return does Schedule PC go with?
Attach Schedule PC to Form 20S or Form 65.
Do I need to use My Alabama Taxes before completing the schedule?
Yes, for credits marked with an asterisk. The form says those credits must be submitted through MAT before Schedule PC is completed. Part V also requires AR-PTE to be filed on MAT for the Income Tax Capital Credit.
What if I receive a credit from more than one entity?
Where the form requests an entity FEIN for a credit from Schedule K-1, it says to attach a schedule if the credit comes from more than one entity.
Where do I report credits allocated to owners?
Part W, line 9 subtracts total refundable credits on line 8 from remaining credits allowable on line 5. Enter the result on Schedule K, line 21.
Can credits used on Form 20S exceed the tax due?
No. Part W says the credits used to offset Form 20S tax due cannot exceed the tax liability on Part W, line 2. Enter the total from Part W, line 4 on Form 20S, page 1, line 33.