The R&D tax credit is valuable to small, midsize, and early-stage businesses. A specific benefit: The credit can be used to offset payroll tax—either instead of or in addition to income tax.
A company may use the R&D credit to offset payroll tax if it has:
Companies can generate up to $250,000 in payroll tax credits per year, for up to five years.
A company with $400,000 of eligible expenses, for example, could earn an R&D credit in the amount of $40,000—the entirety of which may be used to offset payroll tax. A company with more than $2.5 million of eligible expenses, on the other hand, could generate a credit in excess of $250,000. Because $250,000 is the maximum amount that may be used to offset payroll tax, any credit earned above that amount would need to be used against ordinary income tax or carried forward.
Moss Adams performs more than 150 R&D engagements annually. We examine your company’s activities to identify expenses eligible for R&D incentives, then assemble the proper documentation to support your claim. All the while, we’ll help you establish processes that streamline your claims in future years. Learn more about the process >
Startups that need cash can now apply the R&D tax credit against their payroll tax. Our Q&A describes this opportunity–and how you can start benefitting. Read more >
Our infographic breaks down the steps and benefits of the payroll tax credit to help you understand this potential boon for your business. Read more >
Up to $250,000 available annually to new or small businesses—including those with no gross receipts.
Find out if your business qualifies for the R&D tax credit and if the credit can be used to offset payroll taxes by filling out our complimentary benefits estimate request form. A Moss Adams professional will contact you with a preliminary estimate of the potential tax benefit to your organization.
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