How to File Your Alabama Tax Return for 2020: A Step-by-Step Guide

Alabama’s Department of Revenue provides authoritative guidance for completing your 2020 federal and Alabama returns in one streamlined process. Filing accurate state returns on time helps you avoid penalties, secure any funds you may be owed, and maintain good standing as a taxpayer. Whether you are an individual, sole proprietor, or small-business owner, this guide draws directly from official ALDOR resources to simplify every step of the tax-return process.

Before you file, gather all necessary documents to ensure a smooth connection with My Alabama Taxes. You will need last year’s federal and state returns, W-2 and 1099 forms, receipts for deductible expenses, Social Security numbers, and bank details if you choose to e-file with direct deposit. This information will reduce errors, eliminate common “Ray ID” verification delays, and expedite processing.

This step-by-step guide covers who must file based on gross income thresholds and residency rules, key filing deadlines—including the COVID-19 extensions—and how to prepare the correct forms and schedules. You will learn how to report income, calculate adjustments, determine your tax liability or refund, sign and review your return, and choose between e-file and mail. Finally, we explain how to make payments, set up payment plans, and check your refund or balance status online or by phone.

Overview of Alabama State Income Tax for 2020 

Who Needs to File

• Single ($4,000): You must file a 2020 Alabama return if your gross income exceeds $4,000, even if no state tax is due, to claim any withheld amounts on your state return.
  
  
• Head of Family ($7,700): Taxpayers filing as head of family must prepare and file Form 40 or 40A if their gross income exceeds $7,700 to avoid late-filing penalties.
  
  
• Married Filing Joint ($10,500): Married couples filing jointly who earn more than $10,500 must complete combined federal and Alabama returns to report all income accurately.
  
  
• Married Filing Separate ($5,250): If you and your spouse file separately and your income exceeds $5,250, you must e-file or mail your Alabama Form 40 to remain compliant.
  
  
• Under-Threshold Filers: Even if your income falls below these thresholds, you should still file a state return if Alabama tax was withheld so you can recover any overpayment.
  
  

Residency and Nonresident Rules

Alabama taxes residents on all income, regardless of source, while nonresidents owe tax only on Alabama-source income.

• Full-Year Residents: Report worldwide income on Form 40 and use standard or itemized deductions as applicable.
  
  
• Part-Year Residents: Report income earned in Alabama and prorate deductions to reflect in-state residence only.
  
  
• Non-residents: Use Form 40NR to report wages, rental income, or business proceeds from Alabama sources once gross income exceeds the prorated personal exemption.
  
  

Filing Deadlines and Extensions

• Original Deadline (April 15, 2021): Alabama’s due date matched the federal deadline for submitting your federal and state returns.
  
  
• COVID-19 Extension (May 17, 2021): ALDOR extended the filing deadline to May 17, 2021, giving taxpayers extra time to review and sign their returns.
  
  
• Automatic October Extension: An automatic extension to October 15, 2021, applied to the filing deadline only; taxpayers who e-file or mail after May 17 still owed any tax due by May to avoid interest.
  
  

Key Changes for 2020

• Firefighter Cancer Benefits Exemption: Certified firefighters can exclude qualified cancer-related insurance benefits from taxable income on state and federal returns.
  
  
• Firefighter Premium Deduction: Premiums paid for cancer insurance coverage by certified firefighters are fully deductible on your Alabama return.
  
  
• Pre-approved Tax Credits via MAT: Several credits require pre-approval through the My Alabama Taxes portal before you can claim them on Schedule OC.
  
  
• Pandemic-Related Deadlines: In addition to the filing due date, Alabama mirrored specific federal relief measures, allowing more flexibility in completing and mailing your return without penalty.
  
  

What Forms to Use 

Primary Individual Forms

• Form 40: Full-year or part-year Alabama residents who itemize deductions or claim income adjustments—such as IRA contributions, alimony paid, or business income—must file Form 40 as their primary return. This form reports total income, exemptions, and deductions and computes state tax liability.
  
  
• Form 40A: Alabama residents with straightforward tax situations—no itemized deductions, no adjustments to income, and interest or dividend income under $1,500—may choose Form 40A for a simpler filing experience. This abbreviated form streamlines your state return when you qualify for the standard deduction.
  
  
• Form 40NR: Nonresidents and part-year residents use Form 40NR to report Alabama-sourced income and must prepare and file if their gross income exceeds $7,700, such as wages earned in the state, rental property proceeds, or business income. You must file Form 40NR if your prorated gross income from Alabama sources exceeds the personal exemption threshold.
  
  
• Form 40V: Whenever you mail a payment by check or money order for any tax owed, include Form 40V as a payment voucher. The voucher ensures that ALDOR applies your payment correctly to your account and tax year.
  
  

All primary forms and instructions are available on the Alabama Department of Revenue’s Forms page or My Alabama Taxes when preparing to e-file.

Common Schedules and Attachments

• Schedule A: Use Schedule A to itemize deductions on your Alabama return, including medical expenses, state and local taxes (capped at $10,000), mortgage interest, and charitable contributions.
  
  
• Schedule B: Complete Schedule B if your total interest and dividend income exceeds $1,500, reporting each source and amount so your Alabama return reflects all taxable investment income.
  
  
• Schedule CR: Claim credit for taxes paid to other states on Schedule CR, detailing the amount of out-of-state tax withheld to prevent double taxation of the same income.
  
  
• Schedule D: Report capital gains and losses from selling stocks, bonds, or real property on Schedule D, which feeds into your total income calculation on Form 40.
  
  
• Schedule E: Use Schedule E to report income or loss from partnerships, S corporations, estates, trusts, rents, and royalties, ensuring all pass-through or rental income is included on your state return.
  
  
• Schedule OC: Attach Schedule OC along with the MAT portal's approval letter when claiming pre-approved tax credits, such as historic rehabilitation or enterprise zone credits.
  
  
• Schedule W-2: Attach a Schedule W-2 to report wage and withholding information from all employers, verifying that the tax withheld matches your W-2 forms.
  
  

Small-Business and Self-Employed Attachments

• Federal Schedule C or C-EZ: Self-employed individuals and sole proprietors must attach Federal Schedule C (or C-EZ for eligible small businesses) to report business income and expenses, then adjust for Alabama-specific rules on depreciation, Section 179, and other differences.
  
  
• Federal Schedule F: Farmers and ranchers use Federal Schedule F to detail farm income and deductible farm expenses; attach Schedule F to your Alabama return and make any necessary state adjustments.
  
  

These schedules must accompany your Alabama return, whether you e-file or submit paper forms. Review ALDOR’s instructions carefully to ensure you include every required attachment for a complete and accurate tax return.

Step-by-Step Instructions to Complete Your Return

Step 1: Gather Necessary Documents

Before you begin your Alabama tax return, assemble all required paperwork to streamline the process. You will need copies of last year’s federal and Alabama returns, 1099 forms showing income and withholding, receipts or documentation for deductible expenses, Social Security numbers for yourself and any dependents, and bank account details if you plan to e-file with direct deposit. These items reduce standard errors and speed up the connection to the My Alabama Taxes portal.

Step 2: Enter Personal Information and Filing Status

On Form 40, 40A, or 40NR, accurately input your name, current mailing address, and Social Security number exactly as they appear on your federal return. Mistakes in these fields often trigger verification delays or “Ray ID” errors during e-file submission. Next, select the correct filing status—single, married filing jointly, married filing separately, or head of family—because your status determines your exemption amounts and which tax tables you will use.

Step 3: Report Income Sources

Use Schedule W-2 to report all wages and withholding from each employer, and complete Schedule B if your combined interest and dividend income exceeds $1,500. If you earned business income, attach Federal Schedule C or C-EZ and make any Alabama-specific adjustments; for farm income, include Federal Schedule F. Accurate income reporting ensures your Alabama tax liability aligns properly with amounts from your federal return.

Step 4: Calculate Adjustments to Income

Claim any allowable adjustments on Part II of Form 40 to arrive at your adjusted gross income. Include deductions for IRA or Keogh contributions, self-employed health insurance premiums, alimony paid, and moving expenses for active-duty military relocating within Alabama. Do not forget the new firefighter cancer insurance premiums deduction for qualified premiums approved through ALDOR.

Step 5: Choose Deductions

Compare the Alabama standard deduction—based on filing status and AGI—with your potential itemized deductions on Schedule A, which may include medical expenses, state and local taxes (capped at $10,000), mortgage interest, and charitable contributions. Part-year residents must prorate itemized deductions to reflect only their lived period in Alabama. Select whichever option yields the larger reduction in taxable income.

Step 6: Determine Taxable Income and Calculate Tax

Subtract your deductions and exemptions from your adjusted gross income to arrive at taxable income. Enter dependent exemptions ($1,000 per qualifying dependent) and your personal exemption amount based on filing status. Then use the Alabama tax tables to find the correct tax on your taxable income and apply any pre-approved credits on Schedule OC, such as enterprise zone or historic rehabilitation credits.

Step 7: Figure Refund or Balance Due

On Form 40, report the Alabama tax withheld (from Schedule W-2), estimated tax payments, and any overpayments from a prior year. Compare total payments to your calculated tax: if payments exceed tax, you are due a refund; if they fall short, you owe the balance. To mail a payment by check or money order, complete and include Form 40V so ALDOR applies your payment to the correct tax year and return.

Step 8: Sign, Review, and Submit Your Return

Before submitting, sign and date your Alabama return—both spouses if filing jointly—and attach all required schedules and attachments. Choose e-file through My Alabama Taxes for the fastest processing, or print and mail your return to the appropriate ALDOR address for refunds, payments, or zero-balance returns. Keep copies of your federal return, Alabama return, and all supporting documents for your records in case ALDOR requests further review.

Filing and Payment Options

Electronic Filing

You can securely e-file your 2020 Alabama tax return through the My Alabama Taxes portal, the Alabama Department of Revenue’s official online filing system. Using e-file ensures faster processing of your state return and any refund, eliminating mailing delays. If you prefer third-party software, many commercial tax programs support Alabama e-file; fees may apply. Free file options are also available through IRS-approved vendors for qualifying taxpayers with lower incomes or special status, and you can locate those offers via the IRS Free File link on the ALDOR site. Additionally, the Volunteer Income Tax Assistance (VITA), Tax Counseling for the Elderly (TCE), and AARP Tax-Aide programs provide free in-person e-file support for eligible individuals at authorized locations across Alabama.

Paper Filing

If you file by mail instead of e-file, download and print the appropriate forms—Form 40, 40A, or 40NR—and all required schedules from the Alabama Department of Revenue’s Forms page. Complete each form legibly, attach copies of your W-2s and any schedules, and sign where needed. Use Form 40V as a payment voucher if you owe tax. Mail your return and any payment to the address that matches your situation:

• For refunds:
  Alabama Department of Revenue
  P.O. Box 154
  Montgomery, AL 36135-0001
  
  
• For payments:
  Alabama Department of Revenue
  P.O. Box 2401
  Montgomery, AL 36140-0001
  
  
• For zero-balance returns:
  Alabama Department of Revenue
  P.O. Box 327469
  Montgomery, AL 36132-7469
  
  

Be sure to allow extra delivery time for paper returns, especially near deadlines, and use a trackable mailing method if you want confirmation that ALDOR received your documents.

How to Make a Payment

• Check or Money Order: You may prepare a check or money order payable to the Alabama Department of Revenue and mail it with Form 40V to the appropriate ALDOR address. Include your Social Security number and “2020 Form 40” on your payment to avoid ID verification delays. Mailing your payment this way ensures that ALDOR applies it correctly to your state return without IRS or federal returns.
  
  
• ACH Debit (E-Check): Through the My Alabama Taxes portal, you can e-file your payment as an ACH debit with no convenience fee, provided your bank routing and account numbers are verified successfully. Select this to create an immediate connection between your bank and ALDOR, so you will not have to wait for paper processing. This electronic method streamlines completing your Alabama return and reduces mailing errors.
  
  
• Credit or Debit Card: To pay by card, visit officialpayments.com or paystatetax.com/al and enter Jurisdiction Code 1100. Although a convenience fee applies, a credit or debit card lets taxpayers file and pay their state return and any balance due without printing or mailing. You will receive an email confirmation once your transaction posts, so you can review and sign off on payment completion.
  
  
• Phone Payment: Call 1-800-272-9829 and follow prompts to pay by credit or debit card using Jurisdiction Code 1100. This human-operated service responds in real time, allowing you to confirm your payment immediately and avoid any “verification successful waiting” status messages. Once you complete the call, ALDOR will process your payment toward the correct tax year and notify you of successful submission.
  
  
• Payment Plan Request: If you cannot pay your full tax owed by the deadline, file a payment plan request via My Alabama Taxes. You will need your Social Security number and any letter ID from the ALDOR to initiate the plan. ALDOR will review your application and respond with an installment agreement, letting you spread payments over time while proceeding with completing your state and federal tax returns.

Tracking Your Refund or Balance Due

Online “Where’s My Refund” Tool

Sign in to your My Alabama Taxes account and navigate to the “Where’s My Refund” page to view the status of your 2020 Alabama return. Enter your Social Security number, filing status, and the refund amount reported on your federal return to avoid verification delays. Electronic filers typically see updates faster than those who mail their state returns.

By Phone

Call the Alabama Department of Revenue’s toll-free refund hotline at 1-855-894-7391 or the daytime line at 334-309-2612 to speak with a representative. A human operator can respond to your inquiry, verify your Ray ID, and help you review your Alabama return’s processing status.

Common Reasons for Delays

Refund holds often occur when information on your Alabama return does not match IRS records, required W-2 or 1099 attachments are missing, or your return is selected for review. To minimize these verification issues, double-check you have signed every page, attached all schedules, and provided accurate income figures to make Balance Due Online.

Once logged into My Alabama Taxes, go to “Account Balance” or “Payments” to see any amount you still owe. From there, you can e-file an ACH debit, pay by credit or debit card, or initiate a payment-plan request—completing the process without printing or mailing additional forms.

Contacting ALDOR for Assistance

If you do not see the expected update online or by phone, email the Alabama Department of Revenue’s Taxpayer Service Center with your name, Social Security number, tax year, and a brief description of your issue. ALDOR will respond with guidance on how to proceed with completing your state return or resolving any balance due.

Final Filing Checklist 

• Verify Personal Information: Review and confirm that your name, Social Security numbers, and mailing address match exactly what appears on your federal return and prior Alabama return to avoid ID identification issues.
  
  
• Confirm Filing Status and Exemptions: Ensure you selected the correct filing status—single, married filing jointly, married filing separately, or head of family—and that all dependent exemptions are entered correctly.
  
  
• Review Income and Withholding: Cross-check your Schedule W-2 and Schedule B entries against your 1099 forms and federal returns to confirm that all wages, interest, dividends, and other income are accurately reported on your state return.
  
  
• Check Deductions and Credits: Reconcile your choice of standard deduction or itemized deductions on Schedule A, and verify any pre-approved credits on Schedule OC to maximize tax relief and prevent delays in processing.
  
  
• Calculate Tax, Payments, and Refund: Compare your total tax liability—determined via the Alabama tax tables—with Alabama tax withheld, estimated payments, and any overpayment applied from a prior year to confirm your refund or balance due.
  
  
• Attach Required Forms and Schedules: Prepare and attach all necessary forms (Form 40/40A/40NR), schedules (A, B, CR, D, E, OC, W-2), and Federal Schedules C or F if applicable, to ensure ALDOR can process your return without requests for missing documents.
  
  
• Sign and Date Your Return: To authenticate your filing before submission, sign and date every page of your Alabama return—both spouses must sign joint returns.
  
  
• Choose Filing Method and Submit: Decide whether to e-file via My Alabama Taxes for immediate connection and faster processing or print and mail your return (with Form 40V if paying) to the appropriate Alabama Department of Revenue address.
  
  
• Retain Copies: Keep complete copies of your filed Alabama return, federal return, all schedules, attachments, and proof of payment or mailing confirmation in your records if ALDOR or the IRS requests additional information.
  
  

Frequently Asked Questions

What if I missed the individual income tax filing deadline?

Suppose you missed your Alabama return's May 17, 2021, individual income tax deadline. File or e-file immediately to minimize penalties. ALDOR charges a 10% late-filing penalty, a 1% per month late-payment penalty, and interest from the original due date. Prompt submission reduces additional tax return penalties and interest accrual.

Can I e-file my federal return and Alabama return together for free?

By utilizing the My Alabama Taxes portal, you can finish filing your federal and Alabama tax returns in a single session without incurring any fees. This electronic filing option checks that all information users enter is accurate, applies any withholdings or payments, and confirms that the submission and payment processes have been completed successfully.

Which deductions are most commonly missed?

Taxpayers often overlook Alabama-specific deductions on their state return, such as premiums for firefighter cancer insurance, the federal income tax paid deduction, self-employed health insurance premiums, and qualified retirement contributions. Review Schedule A and Part II adjustments on Form 40 to claim all allowable deductions, reducing taxable income, and maximizing your refund.

How do I request an extension to file?

Alabama grants an automatic extension to October 15, 2021, for an application. You must pay any tax due by May 17, 2021, to avoid penalties and interest. Complete Form 40V with the “Automatic Extension Payment” box checked, mail a check or money order to ALDOR, or e-file an ACH debit payment online.

Can I file jointly if I moved mid-year? 

If one spouse was a full-year Alabama resident and the other lived out of state for the entire year, you must file separate Alabama returns. Part-year residents may file jointly only if both spouses lived in Alabama for part of 2020. Otherwise, select married filing separately to prepare an accurate state return.

How long will it take to receive my refund? 

In Alabama, returns that are filed electronically typically arrive within three to four weeks, whereas paper returns can take up to ninety days. To check on the status of your refund, you can either call the ALDOR hotline or use the "Where's My Refund" tool on My Alabama Taxes. Processing times vary based on filing volume, return accuracy, and required reviews.

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