565: 2024 Form 565 Credits for Employers in the Aerospace Sector (2024)
Oklahoma · Oklahoma Tax Commission · Used for tax years 2024
Oklahoma Form 565 calculates credits for qualified aerospace-sector employers for tuition reimbursed and compensation paid to qualified employees. It totals the credits to carry to Form 511-CR.
Who files this form
Form 565 is for qualified employers claiming Oklahoma aerospace-sector credits for tuition reimbursed or compensation paid to qualified employees.
A qualified employer is a business or public entity whose principal business activity involves the aerospace sector. This includes aerospace manufacturing, maintenance, repair, parts, support services, research, and education or training.
A qualified employee must work or contract in Oklahoma for a qualified employer and meet the form’s engineering education or Professional Engineer licensing requirements. The definition generally excludes someone employed in Oklahoma’s aerospace sector immediately before the qualifying employment, but includes exceptions for certain prior workers who were not full-time engineers, staffing-company employees, and employees changing qualified employers.
What you'll need
Have the following information available to complete the form:
- The qualified employer’s name as shown on the return, federal employer identification number, and business type.
- Each qualified employee’s name, Social Security number, and date employment began in Oklahoma.
- For the tuition credit: the employee’s graduation date and tuition reimbursed during the tax year.
- For the compensation credit: the institution where the employee earned their engineering degree and Oklahoma compensation paid during the tax year. The form refers to contract labor reported on Form 1099 and wages reported in Box 16 of Form W-2.
If you need more employee lines, enclose a separate schedule with the same information as Columns A through F of the applicable part.
The total credit carries to Form 511-CR. Credits transferred or allocated must also be reported on Form 569.
Common mistakes
- Including costs that are not tuition. Books, fees, and room and board do not qualify.
- Exceeding the tuition limit. Part 1, Column E cannot exceed the average annual amount paid for enrollment and instruction in a qualified program at an Oklahoma public institution. The credit cannot exceed 50% of that amount.
- Ignoring the tuition timing rules. The engineering degree must have been awarded within one year of employment in Oklahoma. No tuition credit may be claimed after the fourth year of employment.
- Exceeding compensation-credit limits. The credit is limited to $12,500 annually per qualified employee. No compensation credit may be claimed after the fifth year of employment.
- Counting excluded compensation. Employer-provided retirement, medical or health-care benefits and reimbursements for travel, meals, lodging, or other expenses are excluded.
- Failing to report transferred or allocated credits. These must be reported on Form 569. Failure to file it will result in denial of the affected credits.
Questions people ask
How much is the tuition reimbursement credit?
The credit is 50% of eligible tuition reimbursed during the first four years of employment. It is capped at 50% of the average annual enrollment and instruction cost for a qualified program at an Oklahoma public institution. The employee’s engineering degree must have been awarded within one year of employment in Oklahoma.
How much is the compensation credit?
The credit is 10% of eligible Oklahoma compensation if the employee graduated from an Oklahoma institution, or 5% if the institution was outside Oklahoma. It is limited to $12,500 per employee annually and applies to the first five years of employment.
Where do I enter the total credit?
Enter the tuition credit from Part 1, line 6 on Part 3, line 1, and the compensation credit from Part 2, line 6 on Part 3, line 2. Add them on Part 3, line 3 and carry the total to Form 511-CR.
Can an employee change qualified employers without being excluded from qualification?
Beginning January 1, 2024, the definition does not exclude a person who previously qualified and established the credit and then changes qualified employers, provided the person has not claimed the credit for the lifetime maximum of five years. The form also states that the credit may be claimed in nonconsecutive tax years.