Alabama Schedule KRCC-I – Income Tax Capital Credit (Recipients’ Share)
Last reviewed: 2025-11-12
Use the Alabama Tax Form Calculator Form AL-40-Schedule-KRCC-I: Alabama Schedule KRCC-I – Income Tax Capital Credit (Recipients’ Share) as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 Alabama state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.
Schedule KRCC-I is used by Alabama taxpayers to report their allocated share of the Income Tax Capital Credit from qualifying industrial, commercial, or research projects certified under Alabama’s incentive statutes. The credit rewards new or expanding businesses that create jobs and make substantial capital investments within the state. Taxpayers must attach this schedule to Form 40 or Form 40NR to apply eligible credits against Alabama income tax liability.
The Department of Revenue issues certificates identifying each participant’s approved share of the credit. Schedule KRCC-I captures that information, calculates how much of the credit may be applied in the current year, and tracks any remaining amount available for carryforward up to the statutory limit period.
How to Complete Alabama Schedule KRCC-I
- Project Information (Part I) — Enter the project name, certificate number, and location as shown on the official Capital Credit Certificate of Completion issued by the Alabama Department of Revenue. These details confirm eligibility under the Alabama Capital Credit Act of 1995.
- Taxpayer’s Share of Credit (Part II) — Report your annual allocation and any remaining credit carryforward from prior years. Add these to determine the total available credit. Credits are typically distributed over a 20-year period, depending on the project’s qualification.
- Income Tax Credit Applied (Part III) — Enter the Alabama tax liability from Form 40 or 40NR, then calculate the credit allowable this year. Only the portion that does not exceed current liability may be applied; any excess becomes a carryforward for future tax years.
- Carryforward Tracking — Keep all prior certificates and past KRCC-I schedules for recordkeeping, as ADOR may request verification of unused credit amounts.
| PART I — Project Information | ||
| 1a | Project Name | |
| 1b | Project Number (from certificate) | |
| 1c | Project Location (City/County) | |
| PART II — Taxpayer’s Share of Credit | ||
| 2 | Taxpayer’s share of the credit for this year (from certificate) | |
| 3 | Credit carryforward from prior years | |
| 4 | Total available credit (add lines 2 and 3) | |
| PART III — Income Tax Credit Applied | ||
| 5 | Tax liability to offset (from Form 40 or 40NR) | |
| 6 | Credit allowable this year (lesser of lines 4 or 5) | |
| 7 | Unused credit to carry forward (line 4 − line 6) | |
Understanding the Alabama Income Tax Capital Credit
The Alabama Capital Credit was created to attract long-term business investment by providing a state income tax credit equal to up to 5 % of the qualifying capital investment annually for 20 years. Eligible projects include manufacturing, warehousing, data centers, and certain headquarters or research facilities. The credit applies to both corporate and individual investors or partners receiving pass-through allocations via K-1 forms.
Credits cannot exceed the taxpayer’s income tax liability but may be carried forward until fully utilized within the program’s authorization window. The Alabama Department of Revenue maintains oversight of compliance, requiring annual certification of operational status and employment thresholds.
By using Schedule KRCC-I, taxpayers ensure accurate reporting and compliance with Alabama’s incentive requirements while preserving eligibility for future credit years.
Last reviewed: 2025-11-12: If you believe this form requires an update, please contact us.
Additional Resources
- Form AL-40 Schedule OC – Other Credits
- Form AL-40 – Individual Income Tax Return
- Alabama Department of Revenue – Capital Credit Program
The Capital Credit remains one of Alabama’s most significant tools for economic development, providing tangible benefits to investors who contribute to job creation and infrastructure growth. Completing Schedule KRCC-I ensures your business or investment fully captures its authorized share while maintaining compliance with state tax incentive reporting.
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Frequently Asked Questions
What happens if Form AL-40X shows that I owe additional Alabama tax?
If your amended return results in a higher tax liability, you should pay the additional amount when you file AL-40X. Interest on underpaid tax generally accrues from the original due date of the return, not the date you amend, so delaying payment only increases the final cost. If you are mailing a check, Alabama recommends using a payment voucher such as Form AL-40V or AL-40NRV, depending on whether you are a resident or nonresident, so that your payment is correctly tied to the amended year and account. Failure to settle the extra liability can lead to billing notices, further interest, and potential collection actions. Even so, voluntarily amending and paying usually results in a better outcome than waiting for Alabama or the IRS to discover discrepancies.
What records should parents keep to support a Schedule AATC claim?
Parents should retain invoices, tuition bills, proof of payment (bank statements, receipts), enrollment confirmations, and school documentation proving entry into the non-failing or nonpublic school. The Alabama Accountability Act requires strict substantiation to prevent misuse, so taxpayers should also keep the school’s classification documents or confirmation that the original school appeared on the “failing school” list for the appropriate year. If audited, the Alabama Department of Revenue may request these records to validate the refundable credit. While documents are not mailed with the return, they should be kept for at least three years.
How can I estimate my Alabama tax before using Form 40A?
You can preview your expected liability with the Alabama State Tax Calculator. It uses current rates, thresholds, and personal exemptions to show how much tax you’ll owe or be refunded. This is especially useful if you are switching from the full Form 40 or adjusting withholding.
Who must file Alabama Form AL-40NR and how does it differ from the resident Form AL-40?
Form AL-40NR is required for individuals who were not Alabama residents for the tax year, or who lived in the state only part-time, but earned income from Alabama sources. Unlike the resident Form AL-40, which reports all income from all sources, Form AL-40NR focuses on allocating income between Alabama and other jurisdictions. You must complete the return if you earned wages for work performed in Alabama, had rental property within the state, received income through a pass-through entity operating in Alabama, or sold property located in Alabama. Part-year residents must report income earned while domiciled in the state and any income sourced to Alabama thereafter. The AL-40NR also requires an allocation schedule to separate Alabama-sourced income from non-Alabama income, ensuring the correct proportion of tax is calculated. This prevents nonresidents from overpaying on non-Alabama income while still ensuring Alabama collects the correct amount on in-state activity.
Why don’t my brackets match payroll tables?
Employers may use different rounding/timing tables; small variances are normal.
Important Notes
All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.