Reduce your startup's payroll taxes through the new Federal R&D Tax Credit
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Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit
#2Interesting and could be helpful, but I'd like more details about the "new Federal R&D Tax Credit" specifically
Is it this (which does not appear to be new) or something else?
https://en.wikipedia.org/wiki/Research_%26_Experimentation_T...
Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit
#3What if I have R&D expenses in a side business- can I use the credit to offset my main job's income tax?
Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit
#4Interesting and could be helpful, but I'd like more details about the "new Federal R&D Tax Credit" specifically Is it this (which does not appear to be new) or something else? https://en.wikipedia.org/wiki/Research_%26_Experimentation_T...
2 things are new:
- 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.
- Gusto has rolled out an new tool that allows their customers to much more easily claim their R&D tax credit, taking on much of the grunt work.
Disclaimer (?): I'm a PM on Gusto's payroll team
Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit
#5What if I have R&D expenses in a side business- can I use the credit to offset my main job's income tax?
Not an accountant, but the article states is applies against the business's social security taxes:
> Beginning in 2017, qualified small businesses may claim up to $250,000 per fiscal year, applying it against their Social Security taxes.
Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit
#6What if I have R&D expenses in a side business- can I use the credit to offset my main job's income tax?
No, unfortunately you can't.
Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit
#7As 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 new R&D tax credit, it was extended, again, for the umpteenth time. There were slight changes made in addition to the extension, but they did not change what qualifies as qualified research.
Gusto is trying to drum up business, that is all.
Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit
#8As 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…
We're only enabling those startups that already qualify for the R&D tax credit to much more easily, and cheaply, claim it. We've seen accountants charge customers up to 25% of the credit obtained, and we think we can help.
Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit
#9Patio11 says that US-based software employers should also look into the Domestic Production Activities Deduction:
Re: Reduce your startup's payroll taxes through the new Federal R&D Tax Credit
#10What if I have R&D expenses in a side business- can I use the credit to offset my main job's income tax?
I am not an accountant.
You may use a loss from a side business in order to offset W-2 income. No need for complicated tax credit forms. Look into the IRS rules around hobbies as they may get suspicious if your "business" loses money for years on end.