Pennsylvania PA Schedule OC - Other Credits

PA Schedule OC - Other Credits
2023 PA Schedule OC - Other Credits (PA-20S/PA-65 OC)IMPORTANT: FILL IN FORM MUST BE DOWNLOADED ONTO YOUR COMPUTER PRIOR TO COMPLETING

PA SCHEDULE OC
Other Credits

PA-20S/PA-65 OC (DR) 04-23 (FI)
PA Department of Revenue

2308310057

2023

OFFICIAL USE ONLY

START Name as shown on the PA-20S/PA-65 Information Return

FEIN

9 DIGIT - NO DASH

➜
You must submit the certificate or notification that approved each credit you are claiming.
1 PA Job Creation Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2 PA Research and Development Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 PA Film Production Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 Entertainment Economic Enhancement Program (Concert Rehearsal and Tour Tax Credit) . . . .

5 Video Game Production Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6 PA Organ and Bone Marrow Donor Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 PA Keystone Innovation Zone (KIZ) Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8 PA Resource Enhancement and Protection (REAP) Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . .

9 PA Neighborhood Assistance Program (NAP) Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 PA Educational Improvement Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 PA Opportunity Scholarship Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12 PA Keystone Special Development Zone Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13 PA Historic Preservation Incentive Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14 Coal Refuse Energy and Reclamation Tax Credit

...................................

15 Mixed Use Development Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16 Waterfront Development Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17 Manufacturing and Investment Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18 Beginning Farmer Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19 Pennsylvania Resource Manufacturing Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20 Other restricted credits not listed above. Enter type:

21 Out-of-State Credits – S Corporation Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22 Total PA Other Credits. Add Lines 1 through 21 and enter total here . . . . . . . . . . . . . . . . . . . .

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2023
Instructions for PA-20S/PA-65 Schedule OC

Other Credits

PA-20S/PA-65 OC IN (DR) 04-23

WHAT’S NEW
The Educational Improvement Tax Credit program has
updated guidelines regarding married couples with joint
ownership in pass-through entities. Please see the DCED
website for more information.
Married taxpayers no longer have to file separate PA-40
returns to claim any of the restricted credits.
The primary taxpayer should be listed on the entities' request
to pass through the credit in order for the credit to be applied
to the return.

GENERAL INFORMATION
PURPOSE OF SCHEDULE
A PA S corporation, partnership, and limited liability company
filing as a partnership or PA S corporation for federal income
tax purposes uses PA-20S/PA-65 Schedule OC to enter its
share for each tax credit received after applying the tax
credit to the entity’s corporate liability, if any.
A tax credit passed through from another entity can only be
applied to tax liability resulting from the RCT-101, PA
Corporate Tax Report. Do not report a tax credit passed
through from another entity on PA-20S/PA-65 Schedule OC
with the exception of EITC and OSTC.
REDUCTION IN EXPENSES
Pennsylvania does not allow the deduction of certain
expenses used to qualify for the Neighborhood Assistance
Program and the Educational Improvement Tax Credits. If
the expenses were deducted in calculating federal taxable
income, the amount should be reported as a reduction in
expenses on PA-20S/PA-65 Schedule M, Part II, Section V,
Line f. Do not reduce Pennsylvania taxable income by
amounts paid to qualify for the tax credit.
TAX CREDITS CLAIMED ON SCHEDULE OC
For each tax credit claimed, the entity must submit with the
PA-20S/PA-65 Schedule OC, the tax credit certificate or
award notification for each tax credit claimed.
The following is some general information regarding tax
credits:
● The restricted tax credits on PA-20S/PA-65 Schedule
OC may be passed through to the taxpayer/owner and
claimed against the tax liability for a taxpayer/owner without restriction as to the type or class of income included
in determining the tax liability of the taxpayer/owner.
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● Restricted tax credits are nonrefundable. If applicable,
other nonrefundable credits must be applied to the
account before restricted tax credits.
● The request to pass through tax credit to an entity owner
is irrevocable. Therefore, the entity should not pass
through more than the owner can use in any single year.
● Tax credits passed through from pass through entities
to other pass through entities may not be passed
through to owners or beneficiaries with the exception of
EITC and OSTC.
PASSING THROUGH TAX CREDIT TO ENTITY OWNERS
Prior to passing tax credits through to entity owners, some
tax credits must first be applied to the entity’s corporate tax
liability, if any, for the year in which the tax credit is granted.
If the entity has a tax liability for the tax year in which the
credit is approved for use, the tax credit must first be applied
to that tax liability. Review the specific information for each
tax credit to determine if the tax credit must first be applied
to corporate liability.
If an entity does not use all approved tax credits, it may elect
in writing to pass through all or a portion of the tax credit to
owners, in proportion to the share of the entity’s distributive
income to which the owner is entitled. In most cases, the tax
credit may be applied up to the full amount of owners’ tax
liabilities, minus any other nonrefundable credits that are
applied first.
An owner of a pass-through entity to which a tax credit is
transferred must immediately claim the tax credit in the tax
year in which the transfer is made. The owner may not carry
forward, carry back, obtain a refund of, sell, assign, or pass
through the tax credit again.
To pass through tax credits to owners, an entity must submit
the claim form, located on the reverse side of the award
letter to the Department of Revenue or provide a request on
entity letterhead, listing the total amount of credit to be
distributed to the entity owner(s), the name and address of
each owner, amount of tax credit to be passed through to
each owner, tax year, tax type, and owner’s tax identification
number.
The statement must be signed by an authorized representative of the entity and should be submitted before owners
file their individual tax returns.
The claim form or request letter must be emailed to the
Department of Revenue’s Office of Economic Development
at: [email protected]. The Subject Line must contain
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the name of the credit and specify the type of attachment,
claim form.

LINE 3

To pass through an Educational Improvement Tax Credit or
Opportunity Scholarship Tax Credit, the taxpayer must complete and submit REV-1123, Educational Improvement Tax
Credit Election Form.

FILM PRODUCTION TAX CREDIT
The taxpayer must claim the tax credit within 3 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.

The REV-1123 must be emailed to the Department of
Revenue’s
Bureau
of
Individual
Taxes
at:
[email protected]. The Subject Line must contain the
name of the credit and specify the type of attachment, 1123
form.
For general information pertaining to all restricted tax credits
as well as specific details regarding each tax credit individually – including each tax credit’s carry forward and pass
through rules, applications, and guidelines – review the PA
Personal Income Tax Guide – Deductions and Credits.
All tax questions regarding utilization of the credits claimed
on the Schedule OC should be directed to the Department
of Revenue at 717-772-3896.

COMPLETING PA SCHEDULE OC
BUSINESS NAME
Enter the complete name of the entity or business as shown
on the PA-20S/PA-65 Information Return.
FEIN
Enter the nine-digit federal employer identification number
(FEIN) of the entity or business as shown on the PA-20S/
PA-65 Information Return.

LINE INSTRUCTIONS
LINE 1
JOB CREATION TAX CREDIT
The taxpayer must claim this tax credit within 5 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.
The entity awarded the credit decides if the tax credit will be
applied towards corporation tax and/or passed through to its
partners, shareholders, or members.

LINE 2
RESEARCH AND DEVELOPMENT (R&D) TAX CREDIT

The tax credit must first be applied to the entity’s corporate
tax liability, if any, for the year in which the tax credit is
awarded before the credit can be passed through to the
entity’s partners, shareholders, or members.
Credits sold or assigned to taxpayers in the same federal
consolidated group may be carried forward for the remainder
of the carry-forward period of the original credit.

LINE 4
ENTERTAINMENT ECONOMIC ENHANCEMENT
PROGRAM (CONCERT REHEARSAL AND TOUR
TAX CREDIT)
The taxpayer must claim the tax credit within 3 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.
The tax credit must first be applied to the entity’s corporate
tax liability, if any, for the year in which the tax credit is
awarded before the credit can be passed through to the entity’s partners, shareholders, or members.

LINE 5
VIDEO GAME PRODUCTION TAX CREDIT
The taxpayer must claim the tax credit within 3 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.
The tax credit must first be applied to the entity’s corporate
tax liability, if any, for the year in which the tax credit is
awarded before the credit can be passed through to the
entity’s partners, shareholders, or members.

LINE 6
PA ORGAN AND BONE MARROW DONOR TAX CREDIT
The taxpayer must claim this tax credit within 3 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.
The entity decides if the tax credit will be applied towards
corporation tax and/or passed through to the entity’s
partners, shareholders, or members.

LINE 7

The taxpayer must claim this tax credit within 15 years of the
effective date on the certificate issued by the Department of
Revenue.

KEYSTONE INNOVATION ZONE (KIZ) TAX CREDIT
The taxpayer must claim this tax credit within 5 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.

The tax credit must be first applied to the entity’s corporate
tax liability, if any, for the year in which the tax credit is
awarded before the credit can be passed through to the entity’s partners, shareholders, or members.

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LINE 8
RESOURCE ENHANCEMENT AND PROTECTION
(REAP) TAX CREDIT
The taxpayer must claim this tax credit within 15 years of the
effective date on the certificate issued by the Department of
Revenue.
The tax credit must first be applied to the entity’s corporate
tax liability, if any, for the year in which the tax credit is
awarded before the credit can be passed through to the
entity’s partners, shareholders, or members.

LINE 9
NEIGHBORHOOD ASSISTANCE PROGRAM (NAP)
TAX CREDIT
The taxpayer must claim this tax credit within 5 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.
● The tax credit must first be applied to the entity’s corporate tax liability, if any, for the year in which the tax credit
is awarded before the credit can be passed through to
the entity’s partners, shareholders, or members.
● Pennsylvania does not allow the deduction of certain
expenses used to qualify for the Neighborhood Assistance Program tax credit. If the expenses were deducted
in calculating federal-taxable income, the amount should
be reported as a reduction in expenses on PA-20S/PA-65
Schedule M, Part II, Section V, Line f. Do not reduce
Pennsylvania taxable income by amounts paid to qualify
for the tax credit.

LINE 10
EDUCATIONAL IMPROVEMENT TAX CREDIT (EITC)
The entity decides if the tax credit will be applied towards
corporation tax and/or passed through to its partners, shareholders, or members.
● A business entity may carry forward unused credits or
credits not passed through to the entity’s owners for two
years. A business entity may include a C corporation or
a pass through entity such as an S corporation, partnership, limited liability company, or special purpose entity.
Only the business entity awarded the credits may carry
the credits forward. The owners of a business entity that
has been awarded credits may not carry forward any
credits passed through to them. This includes special
purpose entities’ owner/members.
● Pass-through business entities not intending to carry forward credits may elect to pass through the credits in
whole or in part to their owners, but they must continue
to pass the credits through to all the owners in proportion
to the distributive income percentage of the owners.
● To make an irrevocable election to pass through an
EITC or OSTC tax credit to partners, shareholders, or
members, an entity should visit the Department of
Revenue’s website at revenue.pa.gov and complete
REV-1123, EITC/OSTC Tax Credit Election Form. The
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entity must complete a separate REV-1123 for each year
the tax credit is awarded and not used in whole or in
part.
● Pennsylvania does not allow the deduction of certain
expenses used to qualify for the Educational Improvement Tax Credit. If the expenses were deducted in calculating federal-taxable income, the amount should be
reported as a reduction in expenses on PA-20S/PA-65
Schedule M, Part II, Section V, Line f. Do not reduce
Pennsylvania taxable income by amounts paid to qualify
for the tax credit.

LINE 11
OPPORTUNITY SCHOLARSHIP TAX CREDIT (OSTC)
The entity decides if the tax credit will be applied towards
corporation tax and/or passed through to its partners, shareholders, or members.
● A business entity may include a C corporation or a passthrough entity such as an S corporation, partnership,
limited liability company, or special purpose entity. Only
the business entity awarded the credits may carry the
credits forward. The owners of a business entity that has
been awarded credits may not carry forward any credits
passed through to them. This includes special purpose
entities’ owner/members.
● Pass-through business entities not intending to carry forward credits may elect to pass through the credits in
whole or in part to their owners, but they must continue
to pass the credits through to all the owners in proportion
to the distributive income percentage of the owners.
● To make an irrevocable election to pass through an
EITC or OSTC tax credit to partners, shareholders, or
members, an entity should visit the Department of
Revenue’s website at revenue.pa.gov and complete
REV-1123, EITC/OSTC Tax Credit Election Form. The
entity must complete a separate REV-1123 for each year
the tax credit is awarded and not used in whole or in
part.
● Pennsylvania does not allow the deduction of certain
expenses used to qualify for the Educational Improvement Tax Credit. If the expenses were deducted in calculating federal-taxable income, the amount should be
reported as a reduction in expenses on PA-20S/PA-65
Schedule M, Part II, Section V, Line f. Do not reduce
Pennsylvania taxable income by amounts paid to qualify
for the tax credit.

LINE 12
KEYSTONE SPECIAL DEVELOPMENT ZONE
TAX CREDIT
The taxpayer must claim this tax credit within 10 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.
The entity decides if the tax credit will be applied toward corporation tax and/or passed through to the entity’s partners,
shareholders, or members.
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LINE 13
HISTORIC PRESERVATION INCENTIVE TAX CREDIT
The taxpayer must claim this credit within 10 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.
● Credits sold or assigned to taxpayers may be carried
forward for the remainder of the carry-forward period of
the original credit.
● The tax credit must first be applied to the entity’s tax
liability, if any, for the year in which the building is placed
into service before it can be passed through to its
partners, shareholders, or members.

LINE 14
COAL REFUSE ENERGY AND RECLAMATION
TAX CREDIT
The taxpayer must claim this tax credit within 15 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.
The entity decides if the tax credit will be applied towards
corporation tax and/or passed through to its partners, shareholders, or members.

LINE 15
MIXED USE DEVELOPMENT TAX CREDIT
The taxpayer must claim this tax credit within 7 years of the
effective date on the certificate issued by the Pennsylvania
Housing Finance Agency.
The entity decides if the tax credit will be applied towards
corporation tax and/or passed through to its partners, shareholders, or members.

LINE 16
WATERFRONT DEVELOPMENT TAX CREDIT
The taxpayer must claim this tax credit within 5 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.
The entity decides if the tax credit will be applied toward corporation tax and/or passed through to the entity’s partners,
shareholders, or members.

LINE 17
MANUFACTURING AND INVESTMENT TAX CREDIT
The taxpayer must claim this tax credit within 3 years of the
effective date on the certificate issued by the Department of
Community and Economic Development.
The entity decides if the tax credit will be applied towards
corporation tax and/or passed through to its partners, shareholders, or members.
4

LINE 18
BEGINNING FARMER TAX CREDIT
The taxpayer must claim this tax credit by the expiration date
on the certificate issued by the Department of Community
and Economic Development.

LINE 19
PENNSYLVANIA RESOURCE
MANUFACTURING TAX CREDIT
The taxpayer must claim this tax credit by the expiration date
on the certificate issued by the Department of Revenue.
The tax credit must first be applied to the entity’s corporate
tax liability, if any, for the year in which the tax credit is
awarded before the credit can be passed through to the entity’s partners, shareholders, or members.

LINE 20
OTHER RESTRICTED CREDITS NOT LISTED ABOVE

LINE 21
OUT-OF-STATE CREDITS S CORPORATIONS ONLY
Certain S corporations are not taxed as S corporations
(taxed as a C corporation) in other states. In such cases an
entity must account for taxes paid to other states in order to
claim the correct resident tax credit.
NOTE: A C corporation return must be submitted.
Do not use Line 20 to report a resident credit for an entity
level tax. Certain states have imposed an entity level tax
(ELT) on pass-through entities resulting from the Federal Tax
Cut and Jobs Act (P.L. No: 115-97). Please see Answer ID
3618: (https://revenue-pa.custhelp.com/app/answers/
detail/a_id/3618/kw/3618) on the Department’s website for
additional information and clarification.
Only Pennsylvania resident shareholders can claim
credit for taxes paid to other states by the entity.
To calculate the amount of Pennsylvania resident credit,
multiply the amount of income apportioned to the other state
by the Pennsylvania personal income tax rate of 3.07 percent. The credit is the lesser of this calculated amount or the
actual amount of tax paid to the other state.
The C corporation from another state that is an S corporation
for Pennsylvania reports on Line 5 the lesser of the amount
of tax paid on the apportioned income as compared to the
tax rate of Pennsylvania.
The entity then distributes the amount reported on Line 5
according to ownership percentage.

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LINE 22

EXAMPLE
Total income from everywhere . . $100,000
PA-source income . . . . . . . . . . . . . 25,000
Other state’s income . . . . . . . . . . . . 75,000 x 2.00 percent (0.0200)
= $ 1,500

TOTAL PENNSYLVANIA OTHER CREDITS
Add Lines 1 through 21. Enter the total credits here and on
the PA-20S/PA-65 Information Return, Section V, Line 13a.

Other state’s income
Also taxed in Pennsylvania . . . . . . . 75,000 x 3.07 percent (0.0307)
= $ 2,302
Lesser of the two. . . . . . . . . . . . . . . $1,500

The amount of credit reported on Line 5 is $1,500 because
it is less than the amount of tax payable to Pennsylvania.
NOTE: Resident shareholders report this credit on
their PA-40 Personal Income Tax Return, as a resident
credit on PA-40 Schedule G-L.

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LINE
NUMBER

TAX CREDIT PROGRAM NAME

ADMINISTRATING AGENCY

LINE 1

JOB CREATION TAX CREDIT