Small businesses with gross receipts under $5 million are now able to apply part or all of their research credit against their payroll tax liability, rather than their income tax liability. One caveat, the business cannot have any gross receipts pre-2012.
How to Apply
To apply, the business must complete and attach Form 6765, Credit for Increasing Research to their income tax return. However, if a business has already filed this tax season, they can still take advantage of the new option. Due to a special rule for the 2016 tax year, businesses that did not originally choose the option can still do so by completing an amended return by December 31, 2017 (IRS Notice 2017-23).
Once the option has been selected, businesses can claim the payroll tax credit by filling out Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities and attaching it to their payroll tax return. We use Gusto to implement this.
How to Begin
If you would like to discuss the research tax credit further, contact Scott via email at email@example.com
CPA + Partner at Why Blu