What are R&D Tax Credits

The Federal Research and Development (R&D) tax credit, also known as the Research and Experimentation (R&E) tax credit, is intended to reward U.S. based companies to increase their investment in Research and Development activities. Your company may qualify for the R&D tax credit if you are a qualified small business, and you perform qualifying research activities, such as developing new products or enhancing processes, or experimenting with new technology, among others.

To claim this credit, your company must elect to apply the R&D credit against payroll tax liability by filing the Federal form 6765  alongside your business income tax return. The tax credit can then be claimed by filing the Federal form 8974  as an attachment to your quarterly 941 payroll tax return.

You may reference the IRS site for more detailed information on this tax credit and its filing process.