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Reduce your startup's payroll taxes through the new Federal R&D Tax Credit

gusto.com

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Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit

#31

Post by mnierstedt »

mrkurt wrote: post #11
cde-v wrote: post #7

As an accountant I have had to shoot attempts at claiming this credit down time and time again. Unless you are doing cutting edge/novel research into AI, machine learning, quantum computing, etc you will not qualify for the credit. Think about it this way, unless your research is something you could write a scientific paper on and have it published in a peer reviewed journal, it will not qualify. Also, this is not a…

It's working! I didn't know about this credit and I'm fairly sure we qualify. I think many companies building internet infrastructure can.

Hi there. Another PM chiming in from Gusto on Federal R&D :).

While you may be eligible, you will need to make sure that you have filed Form 6765 with your 2016 Corporate Tax Return. The good news (I guess) is that if you didn't file this form you can amend you Corporate Tax Return (https://www.irs.gov/pub/irs-pdf/i6765.pdf). However, just be advised that the process to amend a corporate tax return is often pretty painful. So you may want to be sure that the credit will be worth your while.

It sounds like you are eligible, but I would double check with an accounting firm just to be sure. If you go to our accountant page (https://gusto.com/partners/find-an-accountant) look for "Offers R&D Tax Services" on their company listing. This should give you some very reputable firms to work with on your credit study.

Good luck with your Credit!

Michael from Gusto https://www.linkedin.com/in/michaelnierstedt/

Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit

#32

Post by geoka9 »

jbob2000 wrote: post #18
cde-v wrote: post #7

As an accountant I have had to shoot attempts at claiming this credit down time and time again. Unless you are doing cutting edge/novel research into AI, machine learning, quantum computing, etc you will not qualify for the credit. Think about it this way, unless your research is something you could write a scientific paper on and have it published in a peer reviewed journal, it will not qualify. Also, this is not a…

You don't have to pass the requirements, you just have to pass the person who reviews your proposal. Put enough fancy language in there and you can make it sound like a simple messaging app is cutting edge machine learning. Every company I've worked for has done similar with the Canadian program (SR&ED).

> Put enough fancy language in there and you can make it sound like a simple messaging app is cutting edge machine learning.

Good luck if you get audited, though.

Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit

#33

Post by mozumder »

gamblor956 wrote: post #16
cde-v wrote: post #7

As an accountant I have had to shoot attempts at claiming this credit down time and time again. Unless you are doing cutting edge/novel research into AI, machine learning, quantum computing, etc you will not qualify for the credit. Think about it this way, unless your research is something you could write a scientific paper on and have it published in a peer reviewed journal, it will not qualify. Also, this is not a…

Think about it this way, unless your research is something you could write a scientific paper on and have it published in a peer reviewed journal, it will not qualify. That's not true at all. In the US, at least. As a tax lawyer, I've had to have this conversation quite a few times with accountants who misread the law and don't think it applies to their clients. The US R&D credit has 4 basic requirements, and "cuttin…

Also, it's not necessarily a tech requirement. A restaurant developing a new menu as it tests out recipes is just as much R&D as anything else.

No idea why people think R&D needs to be cutting edge tech research...

Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit

#34

Post by cde-v »

gamblor956 wrote: post #16
cde-v wrote: post #7

As an accountant I have had to shoot attempts at claiming this credit down time and time again. Unless you are doing cutting edge/novel research into AI, machine learning, quantum computing, etc you will not qualify for the credit. Think about it this way, unless your research is something you could write a scientific paper on and have it published in a peer reviewed journal, it will not qualify. Also, this is not a…

Think about it this way, unless your research is something you could write a scientific paper on and have it published in a peer reviewed journal, it will not qualify. That's not true at all. In the US, at least. As a tax lawyer, I've had to have this conversation quite a few times with accountants who misread the law and don't think it applies to their clients. The US R&D credit has 4 basic requirements, and "cuttin…

I agree with all but your first sentence... I think you are just underestimating what topics can have peer reviewed scientific papers written about them.

http://ac.els-cdn.com/S235197891500013X/1-s2.0-S235197891500...

I was more taking a shot at the companies who do a redesign/facelift of their website/customer portal, or a bank struggling to integrate an off the shelf trading tool into their systems.

Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit

#36

Post by cde-v »

mozumder wrote: post #33
gamblor956 wrote: post #16

Earlier quoted context omitted.

Think about it this way, unless your research is something you could write a scientific paper on and have it published in a peer reviewed journal, it will not qualify. That's not true at all. In the US, at least. As a tax lawyer, I've had to have this conversation quite a few times with accountants who misread the law and don't think it applies to their clients. The US R&D credit has 4 basic requirements, and "cuttin…

Also, it's not necessarily a tech requirement. A restaurant developing a new menu as it tests out recipes is just as much R&D as anything else. No idea why people think R&D needs to be cutting edge tech research...

No... one of the requirements is "research which is undertaken for the purpose of discovering information which is technological in nature"

Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit

#37

Post by cde-v »

tedmiston wrote: post #17
cde-v wrote: post #7

As an accountant I have had to shoot attempts at claiming this credit down time and time again. Unless you are doing cutting edge/novel research into AI, machine learning, quantum computing, etc you will not qualify for the credit. Think about it this way, unless your research is something you could write a scientific paper on and have it published in a peer reviewed journal, it will not qualify. Also, this is not a…

Can you clarify sources for what types of R&D activities apply? I've been curious myself and didn't see this mentioned in the blog post.

Honestly, as evidenced by the rabid response above, reading the actual regulations is the best way to understand this topic.

https://www.irs.gov/pub/irs-regs/research_credit_basic_sec41...

Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit

#38

Post by cde-v »

cde-v wrote: post #7

As an accountant I have had to shoot attempts at claiming this credit down time and time again. Unless you are doing cutting edge/novel research into AI, machine learning, quantum computing, etc you will not qualify for the credit. Think about it this way, unless your research is something you could write a scientific paper on and have it published in a peer reviewed journal, it will not qualify. Also, this is not a…

Replying to my own comment since I'm too late to edit. Just read the regs people, the barriers are not as low as the little bit of anecdotal evidence in this thread are suggesting.

https://www.irs.gov/pub/irs-regs/research_credit_basic_sec41...

Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit

#39

Post by goeric »

cde-v wrote: post #7

As an accountant I have had to shoot attempts at claiming this credit down time and time again. Unless you are doing cutting edge/novel research into AI, machine learning, quantum computing, etc you will not qualify for the credit. Think about it this way, unless your research is something you could write a scientific paper on and have it published in a peer reviewed journal, it will not qualify. Also, this is not a…

While the R&D tax credit is not new, one of the tweaks was not a slight change.

Before, you could only offset your corporate income taxes, so you couldn't claim the credit if you weren't profitable (because you wouldn't have corporate income taxes). Now, you can offset social security taxes, which are based on payroll. So more startups can now benefit from this credit.

Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit

#40

Post by jgalt212 »

cde-v wrote: post #7

As an accountant I have had to shoot attempts at claiming this credit down time and time again. Unless you are doing cutting edge/novel research into AI, machine learning, quantum computing, etc you will not qualify for the credit. Think about it this way, unless your research is something you could write a scientific paper on and have it published in a peer reviewed journal, it will not qualify. Also, this is not a…

> Unless you are doing cutting edge/novel research into AI, machine learning, quantum computing, etc you will not qualify for the credit

that's patently untrue, I know plenty of firms claiming this credit, not doing cutting edge research, and who are not getting audited.

My personal guess on audit risk rule of thumb is how close to zero does the R&D tax credit get your tax liabilities. e.g. If after the credit, you still pay a lot of taxes, your audit risk is low.

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