Qualified tax credit bonds are bonds issued under IRC Section 54A. The holder of the bond is generally allowed an annual income tax credit instead of receiving periodic interest payments, and the nonrefundable credit functions as interest paid on the bond. The bonds that qualify for the credit have been issued at various times since this credit's debut in 2005, however the credit is not available for bonds issued after December 31, 2017. Currently, this nonrefundable credit can be claimed for the following tax credit bonds:
- Clean renewable energy bond (CREB)
- New clean renewable energy bond (NCREB)
- Qualified energy conservation bond (QECB)
- Qualified zone academy bond (QZAB)
- Qualified school construction bond (QSCB)
- Build America bond (BAB) (Note: BAB holders receive taxable interest along with being allowed a credit.)
The information to complete this form may come from three sources:
- Form 1097-BTC from the bond issuer
- Schedule K-1 if the pass-through entity is the bond holder
- Some other form, schedule, or statement
It's possible that a pass-through entity may report the same information on a Schedule K-1 as well as on a 1097-BTC. If this happens, enter the 1097-BTC information only.
To access the Credit to Holders of Tax Credit Bonds in TaxSlayer Pro, from the Main Menu of the tax return (Form 1040) select:
- Credits Menu
- Credit to Holders of Tax Credit Bonds (8912)
- On the first menu line enter credits reported on Form 1097-BTC
- On the second menu line enter credits reported on some other form, schedule, or statement
- On the third menu line enter credits reported on a Schedule K-1 from a pass-through entity. Where the credit appears on the K-1 depends on the entity:
- Schedule K-1 from a trust or estate: Box 13 Code P
- Schedule K-1 from a partnership: Box 15 Code P
- Schedule K-1 from an S corporation: Box 13 Code P
(Note that Code P on the partnership and S corp K-1 has several possible meanings, so make sure that it applies to a tax credit bond.)
- On the fourth menu line enter the prior year carryforward amount, if any. Exception: credits attributable to a CREB, or a QZAB issued before October 4, 2008, can't be carried forward.
Note: This is a guide to entering credit for tax credit bonds into the TaxSlayer Pro program. This is not intended as tax advice. For more information, refer to the Additional Information links below.