Introduction: What is Schedule A (Form 8610)?

Schedule A (Form 8610), titled Carryover Allocation of Low-Income Housing Credit, is an official municipal finance attachment administered by the Internal Revenue Service (IRS) under the Department of the Treasury. It is authorized under Internal Revenue Code (IRC) Section 42(h)(1)(E) and Section 42(h)(1)(F), as well as Treasury Regulation § 1.42-6.

This schedule is completed by state and local housing credit agencies—commonly known as Housing Finance Agencies (HFAs)—and attached to their annual master report, Form 8610. It serves as the official accounting log used by state agencies to report all “carryover allocations” of the Low-Income Housing Tax Credit (LIHTC) awarded to projects that are still under construction and not yet placed in service.

Purpose of the Form: Why Schedule A (Form 8610) Exists

Under default federal tax law, an allocation of the Low-Income Housing Credit must be made in the exact calendar year a building is completed and placed in service. However, large affordable housing complexes often take two to three years to acquire land, secure permits, and complete construction.

Congress enacted the Carryover Allocation Rule under IRC Section 42(h)(1)(E) to solve this problem. Under this rule, a state housing agency can award credits from its current-year credit ceiling to a developer before construction is finished, giving the developer up to two additional calendar years to complete the project and place it in service. Schedule A (Form 8610) exists to report each carryover agreement to the IRS, proving that the developer met the mandatory federal 10% Basis Expenditure Test to legally preserve the credit.

The 10% Basis Test Explained

A carryover allocation is only valid under federal tax law if the developer satisfies the statutory 10% Test under IRC Section 42(h)(1)(E)(ii):

The Requirement: The developer must spend and incur more than 10% of the reasonably expected basis in the building (including land and depreciable property) within a strict statutory window.
The Timeline: The 10% expenditure must be incurred by the later of:
- The close of the calendar year in which the carryover allocation is made; OR
- The date that is exactly 1 year after the date of the carryover allocation.
Independent Certification: The developer must provide the state housing agency with an independent Certified Public Accountant (CPA) or attorney certification proving the 10% cost threshold was met.

Who Needs to File This Form?

Schedule A (Form 8610) must be prepared and filed by a State or Local Housing Credit Agency whenever it issues one or more carryover allocations during the calendar year under:

IRC Section 42(h)(1)(E): Carryover allocations made to individual qualified low-income buildings.
IRC Section 42(h)(1)(F): Carryover allocations made to multi-building affordable housing developments.

Who Is Exempt / Not Required to File?

The following entities and situations do not require Schedule A (Form 8610):

Agencies with No Carryover Allocations: Housing agencies that only issued final Form 8609 (Part I) allocations to buildings that were already completed and placed in service during the year.
Affordable Housing Developers: Private property developers do not complete or submit Schedule A. The developer executes a private Carryover Allocation Agreement with the state agency, and the state agency files Schedule A with the IRS.
Tax Credit Investors: Limited partners and syndication funds do not handle Schedule A; their credits are claimed on Form 8586.

When to File: Deadlines and Carryover Windows

Schedule A is an annual schedule that must be attached directly to the agency’s master return, Form 8610 (Annual Low-Income Housing Credit Agencies Report).

The filing deadline is on or before February 28 of the calendar year following the year in which the carryover allocations were executed. For example, all carryover agreements signed between January 1 and December 31 must be reported on Schedule A attached to Form 8610 by February 28 of the following year.

The 2-Year Placed-in-Service Construction Window

Once an agency reports a valid carryover allocation on Schedule A, the developer has until the close of the second calendar year following the allocation year to place the building in service. For example, if a carryover allocation is executed in 2026, the building must receive its Certificate of Occupancy and be placed in service by December 31, 2028.

Where and How to File Schedule A (Form 8610)

Schedule A is submitted as an integral attachment to Form 8610:

Attached to Form 8610: Schedule A must be placed directly behind Form 8610 in the agency’s annual filing packet.
Reconciliation: The total dollar amount of carryover credits reported across all projects on Schedule A must match the corresponding carryover allocation total entered on Form 8610, Part III.
Mailing Address: Mail the complete Form 8610 package (including Schedule A and copies of all issued Forms 8609) to the IRS address as per instructions for low-income housing credit agency reports in Philadelphia, Pennsylvania.

Step-by-Step Instructions to Fill Out Schedule A (Form 8610)

Schedule A consists of agency identification fields and an itemized project-level carryover table. Complete each part using the instructions below:

Column / Field	Field Description	Instructions
Header Details	Agency Identification	Enter the state or local housing agency’s legal name, Employer Identification Number (EIN), and reporting calendar year exactly as shown on Form 8610.
Column (a)	Building Identification Number (BIN)	Enter the unique 9-digit BIN assigned to the building (e.g., `NY-26-00101`). If allocating to a multi-building project, list each building’s BIN.
Column (b)	Building Owner Details	Enter the full legal name and Taxpayer Identification Number (EIN or SSN) of the developer/partnership entity receiving the carryover allocation.
Column (c)	Date of Allocation	Enter the exact date on which the legally binding carryover allocation agreement was executed.
Column (d)	Carryover Allocation Amount	Enter the dollar amount of annual housing credit allocated to the building or project under the carryover agreement.
Column (e)	Reasonably Expected Basis	Enter the developer’s total projected eligible cost basis for the completed building/project as determined on the allocation date.
Column (f)	Actual Basis Incurred (10% Test)	Enter the actual cumulative basis incurred by the developer by the close of the calendar year (or within 1 year) to prove compliance with the 10% test.
Column (g)	Multiple-Building Checkbox	Check the box if the allocation is made to a multi-building project under IRC Section 42(h)(1)(F).

Required Documents and Information Needed Before Filling

Before completing Schedule A (Form 8610), the state agency’s allocation officers must assemble the following records:

Executed Carryover Allocation Agreements: The legally binding contracts between the state agency and the housing developer specifying the allocation date and credit amount.
CPA 10% Test Certification Reports: Formal audit letters and cost certifications prepared by independent CPAs proving the developer incurred more than 10% of reasonably expected basis.
Building Identification Number (BIN) Logs: Master state logs verifying that unique 9-digit BINs were properly assigned to each building in the project.
Developer Identification Records: Verified legal partnership names and federal Employer Identification Numbers (EINs) of the recipient ownership entities.

Common Mistakes to Avoid

Missing the February 28 Deadline: Submitting Form 8610 without Schedule A or filing after February 28, which jeopardizes the legal validity of all carryover allocations.
Allocating to Projects Failing the 10% Test: Reporting a carryover allocation for a project that failed to incur more than 10% of its expected basis within the statutory 1-year window.
Mismatched Totals with Form 8610: Submitting a total credit amount on Schedule A that does not equal the carryover allocation line item reported on Form 8610, Part III.
Transposing BIN Numbers: Entering incorrect Building Identification Numbers, creating reconciliation errors when developers later submit their first-year Form 8609.
Failing to Track the 2-Year Placed-in-Service Rule: Failing to monitor whether the developer actually places the building in service before the close of the second calendar year following the allocation year.

Penalties for Non-Compliance

Failing to properly complete and file Schedule A (Form 8610) carries catastrophic consequences under federal tax law:

Invalidation of Tax Credits (IRC § 42(l)(3)): If carryover allocations are not reported on Schedule A, the IRS treats the tax credits as unallocated. The developer will be legally barred from claiming the credits, resulting in multi-million dollar equity losses for the project.
Forfeiture of State Ceiling: The state agency loses the right to carry forward or reallocate the credit authority, permanently reducing the state’s affordable housing funding.
Disqualification from National Pool: Errors or omissions on Form 8610 and Schedule A can disqualify the state housing finance agency from receiving bonus credit allocations from the federal National Pool.

Related Forms or Schedules

Form 8610: Annual Low-Income Housing Credit Agencies Report (the master return to which Schedule A is attached).
Form 8609: Low-Income Housing Credit Allocation and Certification (issued by the agency once the carryover project is completed and placed in service).
Form 8609-A: Annual Statement for Low-Income Housing Credit (filed annually by the building owner).
Form 8586: Low-Income Housing Credit (used by developers and investors to claim the credit).
Form 8823: Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition.

Frequently Asked Questions

1. What is the difference between Form 8609 and Schedule A (Form 8610)?

Form 8609 is issued when a building is completed and placed in service. Schedule A (Form 8610) is filed years earlier while the building is still under construction to report that credit authority has been reserved under a multi-year carryover agreement.

2. Can a private developer file Schedule A (Form 8610)?

No. Schedule A (Form 8610) is strictly an institutional reporting form filed by state and local government housing finance agencies. Private developers receive a Carryover Allocation Agreement from the agency for their records.

3. What happens if a developer fails the 10% basis test?

If a developer fails to incur more than 10% of reasonably expected costs by the statutory deadline, the carryover allocation is legally void. The tax credits automatically return to the state agency as “Returned Credits,” which the agency must report on Form 8610, Part II.

4. Does Schedule A apply to projects financed with tax-exempt bonds?

Generally, no. Projects financed with tax-exempt private activity bonds receive “4% credits” automatically under IRC Section 42(h)(4) without needing an allocation from the state housing credit ceiling, meaning they do not require a Section 42(h)(1)(E) carryover allocation on Schedule A.

5. Can a carryover allocation be extended beyond the second calendar year?

No. The statutory 2-year placed-in-service window under Section 42(h)(1)(E)(i) is strict. If the building is not placed in service by December 31 of the second calendar year following the allocation year, the credits are permanently forfeited unless special federal disaster relief applies.

6. How does a multi-building project report on Schedule A?

Under IRC Section 42(h)(1)(F), an agency can make a project-wide carryover allocation for multiple buildings. Column (g) is checked, and the agency lists each building’s assigned BIN and its proportionate share of the carryover allocation.

Conclusion: Key Takeaways

Schedule A (Form 8610) is the vital reporting mechanism that enables affordable housing developers to secure federal tax credit allocations years before construction is finished. By documenting carryover allocation agreements and verifying the 10% basis expenditure test, state housing agencies ensure orderly financing for long-term affordable housing projects.

State housing allocation teams must verify independent CPA 10% cost certifications, ensure that Building Identification Numbers match project logs, reconcile totals with Form 8610 Part III, and submit the complete package to the IRS on or before February 28.

Schedule A Form 8610 Guide: LIHTC Carryover Allocation