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The Qualified Small Business R&D Payroll Tax Credit Provides up to $250,000 in Annual Savings for Startup Companies

WHAT IS IT?

The Qualified Small Business (QSB) R&D Payroll Tax Credit is a tax incentive geared specifically for early-stage companies.

WHAT'S THE VALUE?
The QSB R&D Payroll Tax Credit reduces early-stage companies U.S. labor costs up to 6.2%, capped at $250,000 per year. Qualified companies may claim credits on 2017 federal income tax returns and apply these credits against OASDI payroll taxes in 2018.

 

 

WHO QUALIFIES?
A “Qualified Small Business” is defined as any company with less than 5 years of revenues and less than $5MM in the current year of revenues with qualifying research activities and expenditures.

TIMING
To take advantage of the benefit, eligible companies must act by claiming the credits on a 2017 income tax return. Credits cannot be applied against payroll taxes until the quarter after the 2017 income tax return is filed. Once filed, starting the following quarter, taxpayers may begin offsetting payroll tax on a per-pay period basis until the credits are completed utilized.

 

 

PROCESS
File federal tax returns ASAP     
Include Form 6765 claiming the R&D tax credit. Starting the following quarter, the Company files its quarterly payroll tax return (Form 941). Repeat the process until credits are fully utilized.

NEXT STEPS

In order to get as much value as soon as possible, companies that are potentially eligible should begin preparing IMMEDIATELY. These opportunities to realize savings via federal tax credits do not come along often. CONTACT US.

ADDITIONAL A&M TAX SOLUTIONS

 

ABOUT A&M

A&M works with emergent market companies in technology, biotech and life sciences to support their strategic planning and development throughout the company’s lifecycle. We achieve results while managing risk and guide companies through key business optimization strategies.  Read more…

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The A&M Tax Minute: Technology Sector

We know what drives you: applying complex tax rules to a rapidly changing industry. We share your passion. Having served many businesses in this industry over the years, we are proud to be in this high-skill and high-challenge environment with you, and we are eager to share what we've learned with our fellow industry mates.