Beginning in 2017, qualified small businesses may be eligible to claim a tax credit for costs related to their research and development activities, up to $250,000.
The IRS allows employers to receive the tax credit by applying it against the employer’s share of Social Security liabilities. The credit will be reported on your quarterly Form 941.
First up, complete Form 6765, Credit for Increasing Research Activities. Once this is on file with the IRS and they have approved your credit, you will file Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities to properly report everything to the IRS. Form 8974 is attached to your 941 when you file it.
It is important to make sure your that this credit is available for your business. Check with your CPA or tax advisor if you have any questions about your eligibility or claiming this credit.
Check out more information on how Gusto helps small businesses with the R&D tax credit.Updated September 26, 2017