Instructions for IRS Form 8974 Qualified Small Business Payroll Tax Credit for Increasing Research Activities

IRS Form 8974 Qualified Small Business Payroll Tax Credit for Increasing Research Activities

This document contains official instructions for IRS Form 8974 , Qualified Small Business Payroll Tax Credit for Increasing Research Activities - a tax form released and collected by the Internal Revenue Service (IRS), a subdivision of the U.S. Department of the Treasury. An up-to-date fillable IRS Form 8974 is available for download through this link.

FAQ

Q: What is IRS Form 8974?
A: IRS Form 8974 is used to calculate and claim the Qualified Small BusinessPayroll Tax Credit for Increasing Research Activities.

Q: Who can claim the Qualified Small Business Payroll Tax Credit?
A: Small businesses that meet certain criteria, including having less than $5 million in gross receipts and no more than 5 years of gross receipts prior to the credit year.

Q: How is the Qualified Small Business Payroll Tax Credit calculated?
A: The credit is calculated based on a percentage of the qualified research expenses that exceed a base amount determined by the IRS.

Q: What are qualified research expenses?
A: Qualified research expenses are expenses that are directly related to qualified research activities, such as wages, supplies, and contract research costs.

Q: What are qualified research activities?
A: Qualified research activities are activities that involve the development or improvement of a product, process, technique, formula, or software.

Q: Do I need to attach IRS Form 8974 to my tax return?
A: Yes, Form 8974 must be attached to your tax return for the year in which you are claiming the credit.

Q: Are there any limitations to the Qualified Small Business Payroll Tax Credit?
A: Yes, there are limitations on the credit, including a general business credit limitation and a limitation based on the amount of the employer's payroll tax liability.