506: 2024 Form 506 Investment New Jobs Credit (2024)
Oklahoma · Oklahoma Tax Commission · Used for tax years 2024
Oklahoma Form 506 calculates the Investment/New Jobs Credit for qualified property investments or new jobs in manufacturing or a web search portal establishment. It reports credit amounts, credits used and carryovers, and is provided with your Oklahoma income tax return. You may
Who files this form
Use Form 506 to claim Oklahoma’s Investment/New Jobs Credit for qualifying manufacturing activities or a web search portal establishment in Oklahoma.
Individuals, partnerships, fiduciaries, corporations and Sub-Chapter S corporations may claim the credit. Individuals may also claim a credit passed through from a partnership or Sub-Chapter S corporation.
The investment credit requires at least $50,000 in qualified depreciable property placed in service in Oklahoma during the taxable year. The new jobs credit is based on an increase in qualified full-time employees. The form generally requires at least $7,000 in wages or salary subject to Oklahoma income tax withholding, with a limited first-year exception explained in the form.
What you'll need
Have the following information and supporting documents ready:
- The name shown on the return, business name, Social Security number and federal employer identification number requested on the form.
- A Manufacturing Sales/Exemption Permit (MSEP), required for a manufacturing facility.
- The facility’s exact location and a full explanation of its manufacturing or other qualifying activity.
- For an enterprise zone claim, the facility’s county and 2020 Census Tract Number.
- For the new jobs credit, a schedule showing the employee-count calculation for all columns. Include each employee’s name, Social Security number, brief job description, annual wages and the date the new job was created. The 2024 form uses 2023 as the base year.
- For the investment credit, a detailed schedule describing the qualified property, its cost and the date it was placed in service. Include information about sales, transfers or disposals that reduce the qualifying investment.
- For carryovers, a schedule showing all carryover credits by tax year claimed and used.
- For a pass-through credit, documentation from the entity showing your share of the credit. Provide it with the income tax return claiming that share.
If using the first-year wage exception for a new employee hired in one of the last three quarters, submit the required affidavit stating that the position will be retained the following tax year and will result in wages exceeding $7,000. The employee must also have wages or salary that will result in annual paid wages exceeding $7,000.
How to file
Provide Form 506 with your Oklahoma income tax return: Form 511, 511-NR, 512, 512-S, 513, 513-NR or 514. The supplied text does not give a mailing address or e-filing directions.
- Enter the identifying information, facility location and explanation of the qualifying activity. For a pass-through claim, enter the partnership’s or Sub-Chapter S corporation’s name in the space at the top.
- Complete both the new jobs and investment credit calculations.
- Enter the greater credit from Column 4 or Column 8 in Column 10. You may claim one type, not both. The type selected in the first year must remain the same for the remaining tax years on that Form 506.
- Complete the amounts used and carried over, and provide the supporting schedules.
- Use this form for each of the four remaining years in which the credit is claimed. Enter new employees hired in subsequent years on a new Form 506.
Transferred or allocated tax credits must also be reported on OTC Form 569.
Common mistakes
- Claiming both credits. Complete both calculations, but claim only the greater of the new jobs credit or investment credit.
- Claiming new jobs tied to previously credited equipment. The notice says a new jobs credit cannot result from investment in equipment on which an investment credit was claimed in previous years.
- Overlooking continuing eligibility. Credits for the four subsequent tax years depend on maintaining the new employee level or retaining the qualified property. Account for property sales, disposals and transfers.
- Ignoring other incentive restrictions. Quality Jobs or Quality Investment incentive payments may affect eligibility. The notices also prohibit claims in specified circumstances involving the Oklahoma Community Economic Development Pooled Finance Act or bond proceeds under a second irrevocable election under the Oklahoma Quality Jobs Incentive Leverage Act.
- Claiming wind-generation investments or jobs. The credit is not allowed for investment or job creation in wind electric power generation described by NAICS No. 221119.
- Leaving out Form 569. The OTC will deny affected transferred or allocated credits if the required Form 569 is not filed.
Questions people ask
What are the basic credit amounts?
The new jobs credit is $500 per qualifying new employee. The investment credit is 1% of qualifying property cost after reductions for sales, transfers and disposals. For a facility in an enterprise zone, these amounts are $1,000 per qualifying new employee and 2%, respectively.
Can leased employees qualify?
A company engaged in manufacturing or processing may still qualify for the new jobs credit when it leases employees through an employee leasing company. The form directs taxpayers to Rule 710:50-15-74 for additional guidance.
How long can the credit continue?
The credit may be allowed in the initial year and the four subsequent tax years, subject to the employee-level or property-retention requirements. The 2024 form lists tax years 2024 through 2028.
What happens to unused credit?
Unused credit may be carried forward, in order, through the four years after the year of qualification and then through the fifteen years following the initial five-year period. Unused credit from qualified depreciable property may also be used in subsequent tax years after the initial 20-year period. Provide a schedule showing carryover credits by tax year claimed and used.