Industry Trends

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

Gusto Editors  
r&d tax credits

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 fiscal 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 conduct R&D audits and help clients determine their eligibility. In this article, you’ll find details about the new tax credit, how accountants are pricing 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 to offset a company’s Social Security 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.
  • 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.
  • Q2 2017 is the first eligible filing quarter.

Significant revenue opportunity for accountants

  • In order to claim this credit, small businesses must conduct an audit to determine their eligibility. A form 6765 needs to be filed with the previous year’s corporate tax return in order to claim credits for the current year.
  • Partners we’ve spoken to are are pricing these R&D Credit Studies at 10-25% of the total credit amount.
  • If your client failed to file their form 6765 for the 2016 tax year, there’s still time. The IRS is allowing a special exception for 2016: you can still conduct the audit and file an amended return by December 31, 2017.

Partner with Gusto to claim this credit

  • 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

Updated: November 9, 2020


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