To file Alabama Form 20C, start with your completed federal Form 1120, carry the taxable income over to the Alabama return, make the state’s required additions and subtractions on Schedule A, apportion the result if you do business in more than one state, apply the 6.5 percent corporate rate, subtract credits and estimated payments, and submit through the My Alabama Taxes portal (or by mail, if you qualify) by the 15th day of the fifth month after your tax year ends. For a calendar-year corporation, that deadline is May 15.
Who Has to File and By When
Every corporation domiciled in Alabama, qualified to do business there, or earning income from Alabama sources must file Form 20C.1Alabama Legislature. Alabama Code 40-18-2 – Levied; Persons and Subjects Taxable That includes out-of-state corporations with Alabama operations and LLCs that elected to be taxed as corporations federally. A corporation operating at a loss still files, both to document the year and to preserve any net operating loss carried forward.
The return is due one month after the federal corporate return.2Alabama Department of Revenue. What Is the Due Date for Filing a Corporate Income Tax Return? For calendar-year filers, federal Form 1120 is due April 15, so Form 20C is due May 15. Fiscal-year filers add one month to their federal due date. If the deadline lands on a weekend or state holiday, it moves to the next business day.
Alabama grants an automatic extension equal to the federal extension plus one month.3Alabama Administrative Code. Rule 810-3-39-.02 – Extension of Time for Filing a Corporation Return A calendar-year corporation with the standard six-month federal extension to October 15 has until November 15 to file in Alabama. Attach the federal extension form to the return when you file. The extension gives you time to prepare paperwork, not to pay. Any tax owed is still due on the original May 15 date, and interest and the late-payment penalty start running the day after.
What to Gather Before You Start
Form 20C is built on top of your federal return. You cannot complete it without the federal Form 1120 finished first, because line 1 pulls directly from federal taxable income (line 30 of the 1120). Alabama considers the state return incomplete unless a signed copy of the federal return is attached, including every supporting schedule, form, and statement — Schedule D, Form 4797, the balance sheet, and anything else that went with it. Missing the federal attachment can trigger a delinquent or frivolous filing penalty.4Alabama Department of Revenue. 2024 Alabama Form 20C Corporate Income Tax Instructions
If your corporation is part of an affiliated group that files a consolidated federal return, you need two more items: Federal Form 851 (the affiliations schedule) and a proforma Form 1120 prepared as if the Alabama-filing entity filed separately. Alabama also wants a copy of every Schedule K-1 for tax entities the corporation held an interest in during the year.
Then there are the Alabama-specific schedules. Not every corporation needs every one. Schedule A reconciles federal taxable income to Alabama taxable income through state-required additions and subtractions, and almost every filer uses it. Schedule AB reports add-backs of interest and intangible expenses paid to related members under §40-18-35(b) and is only needed if your corporation has those transactions.5Alabama Department of Revenue. Alabama Form 20C Schedule AB Instructions Schedule B tracks net operating losses incurred and absorbed. Schedule BC claims credits and exemptions. Schedule C reports nonbusiness income, loss, and expense. Schedule D-1 computes the apportionment percentage for multistate corporations. Schedule FTI reconciles any difference between proforma federal taxable income and the amount on line 1 of Form 20C. A single-state Alabama business with no related-member payments and no NOL can skip AB, B, C, and D-1 entirely.
Working Through the Return
Enter federal taxable income on line 1. Then work Schedule A to add back items Alabama does not allow and subtract items Alabama does not tax. A common addition is interest and intangible expenses paid to related members. A common subtraction is interest earned on U.S. government obligations, which states generally cannot tax. The adjusted figure flows back to Form 20C as Alabama taxable income before apportionment.
Apportionment for Multistate Corporations
If you operate only in Alabama, skip ahead and apply 6.5 percent to the full adjusted figure. If you operate in Alabama and at least one other state, you have to apportion. Since January 1, 2021, Alabama uses a single-sales-factor formula: apportionable business income is multiplied by a fraction of Alabama sales over total sales everywhere.6Alabama Administrative Code. Alabama Administrative Code 810-27-1-.09 – Apportionment Formula You run this calculation on Schedule D-1.
Nonbusiness income is handled differently. Items like gains from selling non-operational real estate or royalties unrelated to your regular trade get reported on Schedule C and allocated to specific states based on where the income-producing asset sits, not spread through the apportionment formula.
Tax, Credits, and Final Balance
Apportioned Alabama taxable income lands on line 14. Multiply by 6.5 percent for the tax on line 15.4Alabama Department of Revenue. 2024 Alabama Form 20C Corporate Income Tax Instructions Subtract any credits claimed on Schedule BC. Subtract estimated tax payments and other prepayments already made during the year. What remains is your balance due or your overpayment. An overpayment can be refunded or applied to next year’s estimated tax.
Submitting the Return and Paying
Alabama requires electronic filing for corporations with assets of $5 million or more. Tax preparers who prepare 25 or more corporate or partnership returns using tax software must e-file every corporate return they handle, with no opt-out.7Alabama Department of Revenue. E-File Requirements Smaller corporations outside the mandate can still e-file through My Alabama Taxes, and the department encourages it. Paper filing is allowed when the federal return was also paper-filed.
If you mail a paper return, send it to:
Alabama Department of Revenue
Income Tax Administration Division
Corporate Tax Section
PO Box 327435
Montgomery, AL 36132-7435
Pay electronically through My Alabama Taxes using ACH debit or credit card. For non-electronic payments under $750, include Form BIT-V (the business income tax payment voucher) with your check or money order.8Alabama Department of Revenue. Form BIT-V Instructions Any single payment of $750 or more must be made electronically; the state will not accept a paper check at or above that threshold. When you e-file, the confirmation page records the date and time of submission, which is what determines whether the return was timely.9Alabama Administrative Code. Alabama Administrative Code Chapter 810-1-6 – Electronic Filing and Payment Print the confirmation and keep it with your records.
Estimated Payments During the Year
If your corporation expects to owe $500 or more in Alabama income tax for the year, you have to make quarterly estimated payments.10Alabama Department of Revenue. Corporate Income Estimated Tax Payments They are due on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. For calendar-year filers, that is April 15, June 15, September 15, and December 15.
Use Form 2220AL to figure out whether you underpaid. It ships with the Form 20C packet and attaches to the return. For paper estimated payments, submit Form BIT-V with each one, remembering the $750 electronic-only threshold.
What Late Filing or Late Payment Costs
Alabama runs the late-filing and late-payment penalties on separate meters, and they stack.
- Late-filing penalty: 10 percent of the tax due or $50, whichever is greater. The $50 minimum applies even when no tax is owed.11Alabama Department of Revenue. Don’t Get Caught with a Tax Penalty
- Late-payment penalty: 1 percent per month or partial month that the tax remains unpaid after the original due date, capped at 25 percent.4Alabama Department of Revenue. 2024 Alabama Form 20C Corporate Income Tax Instructions
- Interest: Charged daily at an annual rate of 7 percent for 2026, calculated as 7% ÷ 365 × days late × unpaid tax.12Alabama Department of Revenue. Quarterly Interest Rates
Interest runs from the original due date no matter what extension you have. If you know you’ll owe but need more time on the paperwork, pay your best estimate by May 15 so the clock has as little as possible to chew on.
How Long to Keep the Records
Alabama generally has three years from the return’s due date or three years from the date you actually filed, whichever is later, to assess additional corporate income tax.13Alabama Legislature. Alabama Code Title 40 Revenue and Taxation 40-2A-7 – Uniform Revenue Procedures The window stretches to six years if the corporation omitted more than 25 percent of its taxable base. If no return was filed, or a fraudulent one was filed, there is no time limit at all. Keep the federal return, the Alabama return, every schedule, and the supporting workpapers for at least the window that applies to your situation.