The Employer Tax Credit must be precertified through My Alabama Taxes before an employer can claim the credit on their Alabama tax return. Precertification of this credit is a two-step process requiring taxpayers to first secure a credit reservation. Eligible employers may begin requesting reservations for tax year 2026 on January 5, 2026. Those with an approved reservation must then submit a credit claim at the end of the tax year and include detailed documentation substantiating their claims.
Prerequisites for submitting an Employer Credit Claim through My Alabama Taxes:
- Taxpayer must have an approved Employer Tax credit reservation.
- Taxpayer must have incurred eligible expenses throughout the year. Eligibility requirements can be found here.
- An active My Alabama Taxes account for the taxpayer who will utilize the credit. If you need assistance creating a My Alabama Taxes account or are unsure which account the credit will be applied to, contact incentives@revenue.alabama.gov.
Procedures for submitting an Employer Credit Claim through My Alabama Taxes:
- Visit My Alabama Taxes and enter your credentials to login.
- Once logged in, click on the Other Actions tab and select Submit a Childcare Credit Claim under Tax Incentives.
- Credit Type: Choose Employer from the drop-down menu and enter the Reservation Year. Select Next.
- EITC Prioritization: Select the box to confirm that you prioritized the payment of eligible expenses for employees who qualify for the Earned Income Tax Credit, if any. Select Next.
- Employer-Provider Classification: Select Yes or No to indicate whether you are claiming the employer credit as someone who owns and operates a childcare facility and select Next.
- Insurance Company: Select Yes or No to indicate whether you are an insurance company filing an insurance premium tax return with the Department of Insurance and select Next.
- Employer Information: Complete the required fields and select Next.
- Credit Claim: Approved employer credit reservations will be shown in the Childcare Credit Reservations table. Complete the required fields for the reservation(s) from which you wish to make a credit claim and select Next.
- Account ID: Select the account where the credit will be utilized.
- Filing Period: Select the filing period for which the credit will be claimed.
- Small Employer: Check the box to indicate that you are a small employer if you had fewer than 25 employees during the applicable filing period.
- Credit Reserved: This field will prepopulate to reflect approved credit reservations.
- Credit Remaining: This field will prepopulate to reflect pending and approved credit claims.
- Eligible Expenses: Download the Eligible Expenses Calculation Spreadsheet to calculate your eligible expenses and enter the total in the eligible expenses box.
- Credit Amount Requested: This field will auto-calculate based on the small employer designation and eligible expenses entered.
- Note! Taxpayers claiming the credit as an insurance company will not select an account and must manually enter the filing period.
- Attachments: Attach the completed Eligible Expenses Calculation Spreadsheet and supporting documents for each eligible expense and select Next.
- Review Submission: Carefully review all information for accuracy (and print a copy of your records). Once reviewed, select Submit.
What to expect after the credit claim is submitted:
- Credit claims are reviewed by the department in the order received. Processing times may vary depending on the volume of requests.
- Incomplete or insufficient documentation may delay credit approval or result in the denial of your credit request.
- You will be contacted via the email address or phone number provided with your request if there are any additional questions.
- The credit will only be awarded after all required documentation is submitted and verified by the department. You will receive a web notice via My Alabama Taxes when your credit claim has been reviewed and approved.
- Pass-through entities that have been awarded a credit must submit a second credit claim through My Alabama Taxes to pass the credit to its owners. Procedures for this process are available below under Additional Resources.
- For additional inquiries, email incentives@revenue.alabama.gov or call 334-353-9789.