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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

#21

Post by dragonwriter »

toomuchtodo wrote: post #12
martinpannier wrote: post #4

Earlier quoted context omitted.

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 credi…

There's something gross about being able to avoid social security contributions as a government provided business incentive. I get it wasn't a Gusto decision (and that they're just enabling claiming the benefit), but it's still unsettling.

There's nothing wrong with it if the funds still get to the trust fund as a transfer from general revenue funds.

Now, I don't think that's actually what the policy change has done, but the problem isn't allowing firms to offset the tax.

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

#22

Post by solotronics »

njarboe wrote: post #13

The layers of control in the current economy seems boundless. Makes me want to join the goldbugs sometimes. Hard money seems so much simpler and freer. An anonymous, portable, fungible, hard to counterfeit and inflate, universal account of previous work value. People give it to you when you give them something or a service they want. It seems like a system of the people, by the people, and for the people.

If these characteristics of money are appealing to you check out Bitcoin. Its digital, distributed, decentralized, and impossible to counterfeit which as a programmer and engineer I find incredibly fascinating.

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

#23

Post by gamblor956 »

jhallenworld wrote: post #3

What if I have R&D expenses in a side business- can I use the credit to offset my main job's income tax?

No, the credit claimed for the side business can only offset income from the side business, and only if your side business is incorporated (but S corporations count).

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

#24

Post by dzink »

toomuchtodo wrote: post #12
martinpannier wrote: post #4

Earlier quoted context omitted.

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 credi…

There's something gross about being able to avoid social security contributions as a government provided business incentive. I get it wasn't a Gusto decision (and that they're just enabling claiming the benefit), but it's still unsettling.

Actually, it is the right kind of incentive. If you are doing innovative work - go hire more people, because your payroll will be lighter.

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

#25

Post by thaumasiotes »

ovi256 wrote: post #14
njarboe wrote: post #13

The layers of control in the current economy seems boundless. Makes me want to join the goldbugs sometimes. Hard money seems so much simpler and freer. An anonymous, portable, fungible, hard to counterfeit and inflate, universal account of previous work value. People give it to you when you give them something or a service they want. It seems like a system of the people, by the people, and for the people.

And after a while, maybe we could pool resources together for projects such as infrastructure, bridges, fire stations, that are too expensive for any single person, but from whom we would all benefit! It would be great! We could all give some of our money for these! Let's call this way of doing things government. Oh wait.

Governments have operated without fiat currency for a long, long, long, long time.

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

#26

Post by toomuchtodo »

dzink wrote: post #24
toomuchtodo wrote: post #12

Earlier quoted context omitted.

There's something gross about being able to avoid social security contributions as a government provided business incentive. I get it wasn't a Gusto decision (and that they're just enabling claiming the benefit), but it's still unsettling.

Actually, it is the right kind of incentive. If you are doing innovative work - go hire more people, because your payroll will be lighter.

At the expense of shortchanging an already underfunded social program.

The right kind of incentive would be a grant, just like the earned income tax credit which comes out of the general fund.

It wasn't enough to get rid of pensions, stagnate wages, shift most income to the top 1%. Now we're going to fund innovation out of the piggy bank of the social program that keeps most elderly out of poverty.

That's my point. It's the wrong way to build a business incentive.

No offense intended to Gusto.

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

#27

Post by Kiro »

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…

Why do you shoot down attempts instead of letting them try? Is there any downside of trying and get rejected? Judging by the comments it sounds like you risk shooting down attempts that may actually succeed.

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

#28

Post by arikr »

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…

As far as I can tell this accountant is spreading misinformation. (I've never written that before!)

I've talked to other companies doing nothing related to novel research, just standard SaaS, who were able to get a healthy sized deduction.

Please don't let this person dissuade you from checking if you can get the credit.

To the accountant - please see all the comments below yours and edit your post, unless you have evidence against them. Your comment may well make people not apply for this who could've gotten the deduction without issue.

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

#29

Post by arikr »

mbesto wrote: post #20
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…

I know more than two software companies first hand that are not doing "AI, machine learning, etc" who qualified for this in the past.

Yeah, oddly enough I believe this accountant is 100% incorrect.

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

#30

Post by martinpannier »

toomuchtodo wrote: post #26
dzink wrote: post #24

Earlier quoted context omitted.

Actually, it is the right kind of incentive. If you are doing innovative work - go hire more people, because your payroll will be lighter.

At the expense of shortchanging an already underfunded social program. The right kind of incentive would be a grant, just like the earned income tax credit which comes out of the general fund. It wasn't enough to get rid of pensions, stagnate wages, shift most income to the top 1%. Now we're going to fund innovation out of the piggy bank of the social program that keeps most elderly out of poverty. That's my point. I…

Credits like these don't necessarily affect the actual money flowing into social security—social security is just used as a "taxation basis" in this case. That being said, that is a hypothesis—I'd have to look at the precise funding plan.
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