Research credit and startup payroll tax offset
Tax credit
Agency: Internal Revenue Service. Agency source
This directory is not tax advice. Confirm eligibility, tax-year rules, deadlines and filing requirements with a tax professional.
Check program requirements [IRS research credit and payroll election][IRS Form 6765 instructions][IRS payroll research credit]
- Who qualifies
- Businesses with qualifying research expenses. Payroll election: gross receipts below $5 million for the year and none before the five-tax-year period ending that year; tax-exempt organizations are excluded. [IRS Form 6765 instructions]
- What it’s worth
- Regular credit generally includes 20% of qualified research expenses above a base; the alternative simplified method generally uses 14% above half the prior three-year average. Eligible startups may elect up to $500,000 for payroll taxes. [IRS research credit and payroll election][IRS payroll research credit]
- How to claim
- Calculate on Form 6765. For the payroll offset, elect on the income tax return, then attach Form 8974 to the employment tax return, such as Form 941. [IRS research credit and payroll election]
- Deadlines and application windows
- Make the payroll election with a timely original return, including extensions. Start claiming in the first calendar quarter after filing; the election is limited to five tax years. [IRS payroll research credit][IRS Form 6765 instructions]
Amounts are subject to the conditions in each listing. A source review does not mean applications are open or that a business qualifies.
Official sources
Listing reviewed