Taxpayers claiming certain credits must now apply through My Alabama Taxes (MAT) and receive approval before claiming the credit on their individual income tax return. If the credit claimed on an individual income tax return is from a Schedule K-1 issued by a pass through entity, the credit claim will be submitted by the entity and no action is required by the individual.
What credits are required to be pre-certified through MAT?
All credits that require pre-certification must be submitted through MAT. Individual filers can remit the necessary information through their Individual Income Tax Account in MAT, or by selecting the “Submit a Credit Claim” option from the “Other links” menu in MAT. The credits that require pre-certification by Individual Income Tax filers are:
Full Employment Act of 2011
Veterans Employment Act – Employer Credit
Veterans Employment Act – Business Start-up Expenses Credit
Qualified Irrigation/Reservoir System Credit
2013 Alabama Historic Rehabilitation Tax Credit
Alabama Small Business and Agribusiness Jobs Credit
Apprenticeship Tax Credit
2017 Alabama Historic Rehabilitation Tax Credit
Neighborhood Infrastructure Incentive Plan Credit*
Alabama Film Rebate
*The Neighborhood Infrastructure Incentive Plan Credit – This credit expired in 2015. However, there may be some individual income tax filers that still qualify to claim this credit since there is a 10-year period over which the credit can be claimed.
How do you claim credits that do not require pre-certification by an Individual Income Taxpayer?
These credits will be subject to an approval process when the tax return is filed claiming the credit. The following are credits that do not require pre-certification by an Individual Income Taxpayer through MAT:
Alabama Adoption Tax Credit
Credit for Transferring from Failing Public School to Nonfailing Public or Nonpublic School
Alabama Accountability Act Credit – Scholarship Granting Organization (SGO) portion*
Investment Credit (Alabama Jobs Act)**
Alabama New Markets Development Credit
Credit for Taxes Paid to Other States
Dual Enrollment Credit
Growing Alabama Credit***
Rural Physician Credit
Alabama Enterprise Zone Act Credit
Credit for Taxes Paid to a Foreign Country
Income Tax Capital Credit
*Alabama Accountability Act Credit – Scholarship Granting Organization (SGO) portion – The process for reserving a donation to an SGO remains unchanged for the 2020 tax year. Only pass through entity filers are required to complete the new pre-certification process in MAT for donations made to an SGO when the Alabama Accountability Act Credit is passed through to its members.
**Investment Credit (Alabama Jobs Act) – The approval of this credit is managed through the Department of Commerce. Once the Department of Commerce has approved the annual certification, Alabama Department of Revenue will notify the investing company to complete an allocation schedule through MAT. See https://revenue.alabama.gov/tax-incentives/.
***Growing Alabama Credit – The process for reserving a donation to an EDO remains unchanged for the 2020 tax year.
How do you claim credits that are passed through from a Partnership, S-Corporation, Estate, or Trust?
If the credit is from a Schedule K-1 issued by a pass through entity, the credit claim will be submitted by the pass through entity and no action is required by the individual. The credit claim must be submitted by the entity and approved by the Alabama Department of Revenue before the credit will be allowed on an individual’s income tax return. Additional information about credit pre-certification for pass through entities can be found at https://revenue.alabama.gov/tax-incentives/.
How do you claim a tax credit that requires pre-certification using MAT?
Individuals that have a MAT account should complete the following steps:
Individuals that do not have a MAT account and are unable to create one should complete the following steps:
Who should you contact for assistance with the credit submission process and/or questions about individual income tax credits?
Individual taxpayers needing assistance with the credit claim process and/or individual taxpayers who have questions about available tax credits should call the Individual Income Tax Section at (334) 353-9770, (334) 353-0759, or (334) 353-0602.