In December 2015, Congress passed the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), part of which permanently extended the R&D credit and also provided a payroll tax offset for qualified small businesses. See more here: Tax Extenders Finalized – R&D Strengthened, 179D Extended, and more!
Qualified businesses with less than $5 million in gross receipts in the credit year, and no gross receipts for any taxable year preceding the 5-taxable-year period ending with that tax year, can offset payroll tax (capped at $250,000) with R&D Tax Credits.
The draft of the 2016 Form 6765, Credit for Increasing Research Activities, includes a new Section D, Qualified Small Business Payroll Tax Election and Payroll Tax Credit, for taxpayers to use in order to elect and compute the small business payroll tax credit. Those tax credits flow through to a new 2017 (draft) Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities. This new form is filed with Form 941 (2017 draft), Employer’s Quarterly Federal Tax Return, which now includes new lines for imputing the credit amount.
BRAYN Consulting has experts in each of these areas and can help CPAs and their clients identify opportunities for potential cost savings and tax recovery. Contact us at (888) 773-8356 or firstname.lastname@example.org for your complimentary Phase I estimate.