Alabama Tax Law and Compliance

Individual Tax Returns

Click here for a page of links to brief articles answering questions you may have about your Alabama tax return.

Current Developments

The Alabama Accountability Act's School Transfer Tax Credit

In March of this year, the Republican majority that controls both houses of Alabama's Legislature pushed through The Accountability Act of 2013 (HB 84) accompanied by late-night drama, parliamentary shenanigans, and vociferous, but futile, protests from minority Democrats. The Legislature then passed a set of amendments to the act (HB 658) at the end of the session on May 20, and in so doing, failed to heed a request from Republican Governor Robert Bentley to delay the tax credit provisions in the bill for two years to give the Legislature and the people time to reflect on its implications. More...

State Enacts Reemployment Benefits For Employers

Estimated Tax Rules for Individuals Changed

Under a bill passed by the Alabama Legislature and signed by Governor Riley on April 22, 2010 (The Reemployment Act of 2010, or TRA2010), Alabama employers will be entitled to a deduction of up to 50% of wages paid to previously unemployed workers. More...

On April 20, 2010, the Alabama Legislature amended the state's rules for estimated tax penalties, and brought them into line with Federal provisions as stated in IRC 6654. The effective date for the new legislation is January 1, 2010; but since it was signed into law after the due date for the first installment of 2010 estimated taxes, the Alabama Department of Revenue has announced that no penalties will be levied under the new law if taxpayers are in compliance by September 15, 2010. More...

Clock Ticking On Extended NOL Election

Federal Stimulus Plan Provides Major Tax Reductions for Individuals

On August 13, the IRS issued a news release reminding taxpayers that time is running out on the ability to elect an extended carry-back period for a 2008 Net Operating Loss (NOL). Under provisions enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA), most corporations wishing to carry losses back more than the statutory two years must elect by September 15 of this year, and most individuals must file their election no later than October 15. The ARRA election permits taxpayers to who qualify to carry back their 2008 NOL for three, four, or five tax years. More...On Friday evening, February 13, 2009, both houses of Congress reached agreement on a historic federal stimulus plan projected to cost almost $800 billion. The new plan, named the American Recovery and Reinvestment Act of 2009 (ARRA, or The Recovery Act), was signed by President Obama in a ceremony in Denver on February 17. According to the Congressional Joint Committee on Taxation (JCT) estimates, about 30% of ARRA's benefits are in the form of tax breaks for individuals ($232 billion), while the bill contains approximately $80 billion in business and energy tax reductions. More...

Alabama Farmers Qualify for Tax Break Due to Drought

Alabama cattle farmers may be eligible for an extended period of time in which to reinvest the proceeds of livestock sales in order to avoid paying tax on the profits, if the sales were forced by drought conditions. Such sales are considered to be "involuntary conversions" under Internal Revenue Code Section 1033(e)(2), and farmers have up to four years to reinvest the proceeds in property that is "simlar or related in use" to the converted property. A reinvestment within the required period allows the farmer to defer reporting the gain on the sale while reducing the basis of the replacement property by the amount of the gain not reported. The Alabama Code adopts federal Section 1033 by reference, so its benefits will be available on the farmer's Alabama return also. More...

Six Alabama Counties Get Favorable Tax Credit Designation

Six Alabama counties (Butler, Dallas, Macon, Perry, Sumter, and Wilcox) have been designated as "Rural Renewal Counties" by the Internal Revenue Service. The significance of the designation is that employers may be eligible for a credit of up to 40% of the wages paid to employees who are residents of the six counties and who begin work for the employer after May 27, 2007. The employer does not have to be located in the rural renewal county to claim the credit.

The credit, referred to as the "Work Opportunity Tax Credit", is provided by Section 51 of the Internal Revenue Code. Eligible employees include persons who are between the ages of 18 and 39. The six Alabama counties were selected, along with rural counties from 31 other states, because they experienced a net decline in population between the years of 1990 - 1994 and 1995 - 1999. Employers who think they may have eligible employees should contact their tax advisor immediately, since there is a "pre-screening" form (Form 8850) that must be completed within 28 days of the employee beginning work.

Links to a list of Archived Articles classified by topic.

This page last updated 6/27/2013

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