Q: Is form CRS required to completed and attached to an income tax return when claiming a business tax credit?

The Credit Schedule (CRS) is required  when taxpayers report certain Delaware tax credits (and any carryforward amounts).  A copy of the approval letter/certificate for approval of the tax credit should be attached when required.

 

Q: Which credits are covered on CRS?

Non-Refundable

• Neighborhood Assistance Tax Credit (Title 30, §§ 2001–2008)
• Economic Development Credits (Title 30, §§ 2010–2015)
• Targeted Areas / Brownfield-related provisions (Title 30, §§ 2020–2024)
• Clean Energy Technology Device Manufacturers’ Credit (Title 30, § 2040)
• Research & Development Tax Credit (Title 30, §§ 2070–2075)
• Land & Historic Resources Conservation Tax Credit (Title 30, §§ 1801–1807)
• Historic Preservation Tax Credit (Title 30, § 1112 and/or §§ 1811–1817)
• Automatic External Defibrillator (AED) Credit (Title 30, Chapter 20C)

 

Refundable

BUS-CRS Only:

• Employer Tax Credit for Hiring Individuals with Disabilities (Title 30, Chapter 20B)
• New Economy Jobs Program Credits (Title 30, §§ 2080–2086)
• Business Finder’s Fee Tax Credit (Title 30, §§ 2090–2097)

PIT-CRS Only:

• Organ / Bone Marrow Donation Expenses Credit (now Title 30, § 1118)

 

Q: What’s the difference between nonrefundable and refundable credits?

Nonrefundable credits can reduce your Delaware tax liability to no lower than $0. Many non-refundable credits on CRS forms include carryforward provision so that the full credit can be used over multiple years.

Refundable credits can result in a refund if the credit exceeds current year tax liability. Some CRS credits (for example, the current R&D credit and the organ/bone marrow donation expenses credit) are explicitly refundable in statute.

 

Q: Which CRS credits require prior approval (or a certificate) before I claim them?

Many CRS credits are not automatic. If you do not have the approval/certification paperwork, you generally should not expect the credit to be allowed.

Neighborhood Assistance: requires annual approval of the investor proposal by the Director of the Delaware State Housing Authority (DSHA).

Economic Development / Targeted Areas / Clean Energy Manufacturers (2040): these credits require that the taxpayer satisfy the § 2011 requirements, including applying for written approval from the Secretary of Finance or the Secretary’s designee within the time window provided in the statute.

Land & Historic Resources Conservation: credits depend on the donation meeting the statutory requirements and being administered/certified under rules implemented by DNREC and the Department of State.

Historic Preservation requires an application process and a Certificate of Completion from the Delaware State Historic Preservation Office (SHPO).

New Economy Jobs Program: requires certification (and annual review) by the Secretary of Finance before credits are allowed.

Business Finder’s Fee: requires the Director of the Division of Small Business’s authorization (and documentation).

Hiring Individuals with Disabilities:  requires the employee to be certified by the Division of Vocational Rehabilitation or the Division for the Visually Impaired.

 

Q: Which CRS credits do not require prior approval (or a certificate) before I claim them?

The following do not require “program approval,” but you must keep documentation to receive them.

• AED Credit (proof it was purchased/placed in service).
• R&D Credit (records supporting qualified expenses and the calculation).
• Organ/Bone Marrow donation expenses credit (receipts and proof of unreimbursed expenses; claimed in the required tax year).

 

Q: I’m filing a Delaware personal income tax return, but my credit is in “Business Tax Credits.” Can I still claim it?

Yes. Delaware law allows certain Chapter 20 credits to be claimed against personal income tax for pass-through business types such as S-Corporations, Partnerships, and Sole Proprietors who are not subject to corporation income tax.

What should I attach or retain for CRS credits?

As a rule:

• If the credit requires approval: keep and attach the approval letter/certificate from the relevant source as outlined in prior questions.
• If the credit is calculation-based: keep invoices/receipts, payroll support, and calculation workpapers.
• If the credit is transferable: keep the transfer documentation required by the statute/program.

I have multiple credits. Is there an order I should use?

CRS formatting typically separates nonrefundable from refundable credits, because refundable credits can create a refund and nonrefundable credits generally cannot. Otherwise, follow the form organization and collate any documentation in the order of the form.