308-I: Credit for Increased Research Activities – Individuals (2024)
Arizona · Arizona DOR · Used for tax years 2024
Arizona Form 308-I is used by individuals to claim the credit for increased research activities. It reports credits from a sole proprietorship, credits passed through from S corporations or partnerships, and unused credit carryovers, and calculates any refundable portion.
Who files this form
Individuals must complete Form 308-I to claim the credit for increased research activities if they have any of the following:
- A current-year credit from a sole proprietorship.
- A current-year credit passed through from an S corporation or partnership.
- Unused credit carried over from tax years 2009 or later.
Use Form 308-I, not Form 308. If you have no qualified research expenses from a sole proprietorship, no pass-through credit, and no credit carryovers, the form says you are not eligible to claim this credit.
What you'll need
Have the following ready, as applicable:
- Your name as shown on your Arizona income tax return and your Social Security number.
- Records of qualified research wages, supplies, computer rental or lease costs, and contract research expenses.
- Average annual Arizona gross receipts and your fixed-base percentage if claiming the regular sole proprietorship credit.
- Qualified research expense totals for the prior three years if electing the Alternative Simplified Credit.
- Forms 308-P and 308-S showing credits passed through from partnerships or S corporations. If claiming credits from more than one partnership or S corporation, include copies of all these forms received.
- A copy of your Arizona Commerce Authority (ACA) certification if your sole proprietorship credit is refundable. Include it with the form.
- Carryover information showing the original credit, amounts previously used or expired, and remaining credit by tax year.
Before completing the refundable-credit calculation, complete Form 301. If you made the Small Business Income (SBI) election, complete both Form 301-SBI and Form 301.
How to file
Include Form 308-I with your Arizona income tax return.
The form lists Forms 140, 140PY, 140NR, and 140X, along with their SBI versions. It does not provide a mailing address or e-file directions.
Common mistakes
- Using Form 308 instead of Form 308-I. Individuals claiming this credit must use Form 308-I.
- Counting wages used for the federal work opportunity credit. Do not include those wages in the research credit calculation.
- Electing the Alternative Simplified Credit without qualifying expenses in each prior year. If you have no qualified research expenses in any one of the prior three years, the form says you do not qualify for the ASC.
- Skipping prerequisite forms. Complete Form 301 before Part 6. If you made the SBI election, complete Forms 301-SBI and 301 before Part 5.
- Carrying forward credit from a refund year. If you elect a refund of 75% of the excess credit, you cannot carry forward any amount from that year.
- Completing Part 10 when it does not apply. Do not complete Part 10 if you completed Part 5 or Part 6 and are receiving a refund, or if you have no carryovers of this credit.
Questions people ask
Can I use this form if I only have unused credit from earlier years?
Yes. The form covers unused credit carried over from tax years 2009 and later. If you have neither sole proprietorship qualified research expenses nor a current pass-through credit, Part 1 directs you to Part 8 only if you have credit carryovers.
Can a sole proprietor choose between two credit calculations?
Yes. Complete Part 2, lines 8 through 23a, for the regular credit. To elect the Alternative Simplified Credit, check the ASC box and complete Part 12, lines 71 through 85. You do not qualify for the ASC if you have no qualified research expenses in any one of the prior three years.
Where do I report credits passed through from a business?
Report partnership credits from Form 308-P, Part 2, line 4, on line 24. Report S corporation credits from Form 308-S, Part 2, line 4, on line 25.
How is the refundable amount limited?
The tentative refund is 75% of the excess credit calculated in Part 5 or Part 6. In Part 7, the refundable credit is the smaller of that tentative amount or the total maximum refundable credit shown on line 37d.
Does the SBI election change which refundable-credit section I complete?
Yes. If you answered “Yes” to Part 1, line 2 or line 4, complete Part 5 if you made the SBI election. Complete Part 6 if you did not make the SBI election.