Alabama Form 40 Instructions 2025 - 2026

Filing your state taxes correctly often requires more than just the main return; it demands a solid understanding of the supporting documents, which is why this line-by-line instructions article about Alabama Form 40 schedules is designed to be your ultimate companion for the 2026 tax season. Whether you are itemizing deductions to lower your taxable income, reporting interest from your savings, or claiming dependents to maximize your credits, navigating the official PDF attachments is crucial for an accurate submission that avoids processing delays. By breaking down each section of the complex PDF package—from the medical expenses on Schedule A to the specific income details on Schedule RS—we ensure you understand exactly what information belongs in every box, transforming a daunting 45-page file into a manageable checklist. This guide will walk you through the essential schedules found in the official 2026 release, ensuring you don’t miss a single deduction or credit you are entitled to while helping you organize your financial data perfectly for the Alabama Department of Revenue.

How to Complete Alabama Form 40

Page 1: Personal Information And Income

Step 1: Personal Information
At the very top, enter your full name, address, and Social Security number. If filing jointly, include your spouse’s details. Check the appropriate box if you are a foreign resident or if a specific residency circumstance applies to you.

Step 2: Filing Status And Exemptions

Lines 1-4: Check the box that matches your filing status: Single, Married Filing Jointly, Married Filing Separately, or Head of Family. This choice determines your standard deduction and tax rates.

Step 3: Income And Adjustments

Line 5: Enter the total wages, salaries, and tips you earned. This amount usually comes from Box 16 of your W-2 forms.
Line 6: Input your taxable interest and dividend income. If this amount is over $1,500, you must complete and attach Schedule B.
Line 7: Enter the total of your “Other Income.” This figure comes directly from Page 2, Part I, Line 9.
Line 8: Add Lines 5, 6, and 7 to calculate your Total Income.
Line 9: Enter your “Adjustments to Income.” This figure comes from Page 2, Part II, Line 16.
Line 10: Subtract Line 9 from Line 8. This is your Adjusted Gross Income (AGI).

Step 4: Deductions And Exemptions

Line 11: Choose your deduction method. Check box a if you itemize (and enter the amount from Schedule A, Line 27) or box b if you claim the Standard Deduction.
Line 12: Enter the amount of Federal Income Tax you paid. This is a deduction Alabama allows that many other states do not.
Line 13: Enter your Personal Exemption amount based on your filing status (e.g., $1,500 for Single).
Line 14: Enter your Dependent Exemption amount. This comes from the calculation on Page 2, Part III, Line 2.
Line 15: Add Lines 11, 12, 13, and 14 to calculate your Total Deductions.
Line 16: Subtract Line 15 from Line 10 to find your Taxable Income.

Step 5: Tax Calculation

Line 17: Calculate your tax due using the tax tables based on the amount on Line 16.
Line 18: Subtract any credits from Schedule OC (like taxes paid to other states) to get your Net Tax Due.
Line 19: Enter any Consumer Use Tax due on online purchases where no sales tax was collected.
Line 20: Enter any Catastrophe Savings Tax if applicable.
Line 21: Add Lines 18, 19, and 20 to determine your Total Tax Liability.

Step 6: Payments

Line 22: Enter the total Alabama income tax withheld from your W-2s, 1099s, and W-2Gs.
Line 23: Enter any estimated tax payments you made during the year or amounts applied from last year’s refund.
Line 24: Enter any payments made with an extension request.
Line 25: Enter total refundable credits from Schedule OC, Section F.
Line 26: Enter composite payments from Schedule CP.
Line 27: Add Lines 22 through 26 to see your Total Payments.

Step 7: Refund Or Amount You Owe

Line 28: If this is an amended return, enter any previous refund received.
Line 29: Calculate your Adjusted Total Payments.
Line 30: If your payments (Line 29) are less than your tax (Line 21), subtract Line 29 from Line 21. This is the Amount You Owe.
Line 32: If your payments are greater than your tax, this is your Overpayment.
Line 33: Enter the amount of your overpayment you want applied to next year’s estimated tax.
Line 34: Enter total donations from Schedule DC (Donation Check-offs).
Line 35: Subtract Lines 33 and 34 from Line 32 to find your Refund Amount.

Page 2: Details And Adjustments

Part I: Other Income

Line 1: Enter alimony received.
Line 2: Enter business income or loss (attach Federal Schedule C).
Line 3: Enter gain or loss from the sale of property (attach Schedule D).
Line 4: Enter IRA distributions (Total and Taxable amounts).
Line 5: Enter pensions and annuities (Total and Taxable amounts).
Line 6: Enter income from rents, royalties, partnerships, estates, and trusts (attach Schedule E).
Line 7: Enter farm income or loss (attach Federal Schedule F).
Line 8: List any other income sources not covered above.
Line 9: Add Lines 1 through 8. Enter the total here and on Page 1, Line 7.

Part II: Adjustments To Income

Line 1: Enter IRA deductions for you and your spouse.
Line 2: Enter payments to Keogh retirement plans or SEP deductions.
Line 3: Enter the penalty on early withdrawal of savings.
Line 4: Enter alimony paid (include recipient’s SSN).
Line 5: Enter adoption expenses.
Line 6: Enter moving expenses (attach Federal Form 3903).
Line 7: Enter the self-employed health insurance deduction.
Line 8: Enter payments to the Alabama College Counts 529 Fund or PACT program.
Line 9: Enter health insurance premiums for small employer employees.
Line 10: Enter costs to retrofit your home for wind/flood resistance.
Line 11: Enter deposits into a Catastrophe Savings Account.
Line 12: Enter contributions to a Health Savings Account (HSA).
Line 13: Enter deposits into an Alabama First-Time or Second Chance Home Buyer Savings Account.
Line 16: Add Lines 1 through 13. Enter the total here and on Page 1, Line 9.

Part III: Dependents

Line 1: Enter the total number of dependents claimed on Schedule DS.
Line 2: Calculate the dependent exemption amount (Number of dependents × Exemption amount). Enter here and on Page 1, Line 14.

Part IV: General Information

This section requires you to answer specific questions about your employer, your driver’s license information, and your residency status. You must sign and date the return at the bottom of this page. If filing jointly, your spouse must also sign.

Schedule A: Itemized Deductions

This schedule is used to claim expenses that can lower your tax bill, similar to the federal Schedule A but with Alabama-specific rules.

Medical and Dental Expenses

Line 1: Enter your total medical and dental expenses incurred during the year.
Line 2: Input your Adjusted Gross Income (AGI) from Form 40, Line 10.
Line 3: Multiply the amount on Line 2 by 4% (0.04) and enter the result here.
Line 4: Subtract Line 3 from Line 1. If the result is zero or less, enter -0-.

Taxes You Paid

Line 5: Enter the total real estate taxes you paid.
Line 6: Enter the combined amount of FICA tax (Social Security and Medicare) and Federal Self-Employment Tax you paid.
Line 7: Enter any Railroad Retirement (Tier 1 only) taxes paid.
Line 8: List other taxes paid, including personal property taxes.
Line 9: Add Lines 5 through 8 and enter the total here.

Interest You Paid

Line 10a: Enter home mortgage interest and points reported to you on Federal Form 1098.
Line 10b: Enter home mortgage interest paid to an individual (not reported on Form 1098), including their name and address.
Line 11: For vehicle loan interest, complete the “Vehicle Loan Interest Spreadsheet” or “Qualified Vehicle Loan Interest Worksheet” if applicable.
- Line 11a: Enter the date your first new vehicle was purchased and its VIN, then the interest amount.
- Line 11b: Enter the date your second new vehicle was purchased and its VIN, then the interest amount.
- Line 11c: Enter the qualified vehicle loan interest from Line 8 of the worksheet in the instruction booklet.
Line 12: Enter points not reported to you on Form 1098.
Line 13: Enter investment interest; you must attach Form 4952A.
Line 14: Add Lines 10a, 10b, 11c, 12, and 13 to get your total interest deduction.

Gifts to Charity

Line 15: Enter contributions made by cash or check (see instructions if more than $250).
Line 16: Enter contributions other than cash or check (attach Federal Form 8283 if over $500).
Line 17: Enter any carryover of charitable contributions from a prior year.
Line 18: Add Lines 15 through 17 for your total charitable contribution.

Casualty and Theft Loss

Line 19a: Enter the loss from Federal Form 4684; check box A for Line 15 or box B for Line 16.
Line 19b: If box B is checked, enter 10% of your AGI (Form 40, Line 10); otherwise, enter zero.
Line 19c: Subtract Line 19b from Line 19a. If zero or less, enter -0-.

Job Expenses and Miscellaneous Deductions

Line 20: Enter unreimbursed employee expenses (job travel, union dues, etc.) and attach Federal Form 2106 if required.
Line 21: List and enter other expenses such as investment fees, tax preparation fees, or safe deposit box fees.
Line 22: Add Lines 20 and 21.
Line 23: Multiply your AGI (Form 40, Line 10) by 2% (0.02).
Line 24: Subtract Line 23 from Line 22. If zero or less, enter -0-.

Other Miscellaneous Deductions

Line 25: List and enter amounts for other miscellaneous deductions not subject to the 2% limit.

Total Itemized Deductions

Line 26: Enter your qualified long-term care insurance premiums (do not include medical premiums).
Line 27: Add Lines 4, 9, 14, 18, 19c, 24, 25, and 26. Enter this total here and on Form 40, Page 1, Line 11, checking box 11a.

Schedule B: Interest and Dividend Income

Use this schedule if you received more than $1,500 in interest and dividend income.

Interest

Line 1: List the name of each payer.
- Column A: Enter the amount of exempt interest for each payer.
- Column B: Enter the amount of taxable interest and dividends for each payer.

Dividends

Line 2: List the name of each payer and enter the amount in Column B.

Total

Line 3: Add the amounts in Column B (Taxable Interest and Dividends) and enter the total here and on Form 40, Page 1, Line 6.

Schedule DC: Donation Check-Offs

You can donate part of your tax overpayment to these specific funds.

Line 1a: Enter amount for Senior Services Trust Fund.
Line 1b: Enter amount for Alabama Arts Development Fund.
Line 1c: Enter amount for Alabama Nongame Wildlife Fund.
Line 1d: Enter amount for Child Abuse Trust Fund.
Line 1e: Enter amount for Alabama Veterans Program.
Line 1f: Enter amount for Foster Care Trust Fund.
Line 1g: Enter amount for Mental Health.
Line 1h: Enter amount for Alabama Breast & Cervical Cancer Program.
Line 1i: Enter amount for Alabama Military Support Foundation.
Line 1j: Enter amount for Alabama Veterinary Medical Foundation Spay-Neuter Program.
Line 1k: Enter amount for Cancer Research Institute.
Line 1l: Enter amount for Children First Trust Fund.
Line 1m: Enter amount for State Parks Division of the Department of Conservation.
Line 1n: Enter amount for Department of Mental Health – 2023.
Line 1o: Enter amount for Alabama Medicaid Agency.
Line 2: Add Lines 1a through 1o. Enter the total here and on Form 40, Page 1, Line 34.

Schedule DS: Dependents Schedule

Use this to list dependents (other than yourself or spouse).

Line 1a: For each dependent, enter their First Name, Last Name, Social Security Number, and Relationship to you. Check the box if you provided more than one-half of the dependent’s support.
Line 1b: Count the total number of dependents claimed in Line 1a and enter the number here and on Form 40, Page 2, Part III, Line 1.

Schedule HOF: Head of Family Schedule

Complete this if you are filing as Head of Family.

Name & SSN: Enter the dependent or qualifying person’s name and Social Security Number.
Relationship: State the person’s relationship to you.
Home Details: Check whether you “Rent” or “Own” the home maintained for the person.
Marital Status: Check “Yes” or “No” if you are married, divorced, or legally separated.
- If “Yes,” enter the Date of Marriage, Date of Divorce, and Date of Legal Separation.
Residency: Check “Yes” or “No” if the person resided with you in your home.
Support: Check “Yes” or “No” if you paid more than 50% of the person’s support.

Schedule W-2: Wages, Salaries, Tips

This schedule details your income and withholding.

Columns A-F: For each W-2, enter the Employee SSN, Employer EIN, Statutory Employee status, Schedule C/C-EZ status, State Code, and Alabama Employer State ID.
Column G: Enter the Alabama State Income Tax Withheld.
Column H: Enter Federal Wages (Box 1 of Form W-2).
Column I: Enter Alabama State Wages (Box 16 of Form W-2).
Column J: Enter Additional Taxable Wages from other states.
Line 16: Total the Alabama Tax Withheld from W-2s (Column G).
Line 17: Enter Alabama Tax Withheld from 1099s and W-2Gs (from Schedule RS, Part V, Line 4).
Line 18: Total lines 16 and 17. Enter the result here.

Schedule RS: Retirement Schedule

Use this to report retirement income and withholding.

Part I: Exempt Distributions

Lines 1-7: For each exempt distribution, enter the FEIN (Col A), check if IRA (Col B), Distribution Code (Col C), Account Number (Col D), Gross Distribution (Col E), State Code (Col F), State ID (Col G), Alabama Withheld (Col H), and Reason Exempt (Col I).
Line 8: Total the Alabama Tax Withheld (Column H).

Part II: Primary’s Taxable Distributions

Lines 1-7: Enter details for taxable distributions (FEIN, IRA, Code, Account Number, Gross Distribution, State Code, State ID, Withheld). Column I tracks the amount Taxable to Alabama.
Line 8: Total the Alabama Tax Withheld (Column H).
Line 9: Total the Retirement Income Taxable to Alabama (Column I).
Line 10: If the taxpayer is 65 or older, check “Yes” to claim the exclusion (up to $6,000). Otherwise, check “No”.
Line 11: Subtract Line 10 from Line 9 to get the Primary’s Alabama Taxable Retirement Distribution.

Part III: Spouse’s Taxable Distributions

Lines 1-11: Repeat the steps in Part II for the spouse’s retirement income.

Part IV: Total Taxable Distribution

Line 1: Enter Primary’s taxable amount (from Part II, Line 11).
Line 2: Enter Spouse’s taxable amount (from Part III, Line 11).
Line 3: Add Lines 1 and 2. Enter total here and on Form 40, Page 2, Part I, Line 4.

Part V: Alabama Tax Withheld

Line 1: Enter withholding from Part I, Line 8.
Line 2: Enter withholding from Part II, Line 8.
Line 3: Enter withholding from Part III, Line 8.
Line 4: Total Lines 1, 2, and 3. Enter here and include on Schedule W-2, Line 17.

Frequently Asked Questions

Q: Where do I find the Adjusted Gross Income for Schedule A?
A: You can find your Adjusted Gross Income on Line 10 of the main Form 40, Page 1.

Q: Do I need to attach Schedule B?
A: Yes, you must complete and attach Schedule B if your interest and dividend income exceeds $1,500.

Q: How do I report W-2 information?
A: You must fill out Schedule W-2 with the employer’s EIN, state wages, and withholding for every W-2 you receive, rather than just attaching the physical forms.