The New R&D Tax Credit: A Boon for Small Businesses and CPAs

Gusto Editors

Starting in 2017, certain small businesses can now qualify for a federal research and development (R&D) tax credit of up to $250,000 per tax year against their employer Social Security tax liability. What businesses qualify for this tax? The answer to that question poses a great revenue opportunity for accountants to partner with Gusto to help clients determine their eligibility. In this article, you’ll find details about the new tax credit, how accountants are are building business lines through this service, and how Gusto secures the credit for your clients.

Fast facts: The federal R&D tax credit

  • The R&D tax credit provides a credit that can be used to offset a company’s payroll or income tax liability.
  • Generally, small businesses with fewer than $5M in gross receipts and who have five years or less of gross receipts can claim up to $250,000 in credit per fiscal year, depending on the tax year.
  • In general, companies developing new products or services may qualify for this tax credit. Over 40 industries are supported.
  • The credit is calculated based on a percentage of gross wages for qualifying employees.

Significant revenue opportunity for accountants

  • In order to claim this credit, small businesses and their accountants can work with Gusto to determine their eligibility. You can see clients’ estimated R&D tax credits directly in Gusto Pro. A form 6765 needs to be filed with the previous year’s corporate tax return in order to claim credits for the current year.
  • One of our accountant partners has built a $250k line of business with the help of Gusto’s R&D Tax Credit Service.

Partner with Gusto to claim this credit

  • Our tax specialists can uncover thousands of dollars in eligible research and development expenses for you to pass along to clients.
  • The credit is claimed on two quarterly forms, which Gusto automatically files: on the 941 as a line item and on a separate 8974 amendment.
  • The credit is only available through payroll filings and cannot be claimed on the corporate tax return.

How to get started

Gusto Editors Gusto Editors, contributing authors on Gusto, provide actionable tips and expert advice on HR and payroll for successful business management.
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