Find out if your startup can save thousands to hundreds of thousands in payroll taxes!
R&D Tax Credits Have Changed Dramatically. Traditionally, these tax credits were calculated and saved up against a Corporation's annual tax forms. For startups that aren't yet profitable, that meant that they would only benefit from these tax credits once they became profitable in future years.
The PATH (Protecting Americans from Tax Hikes) Act of 2015 has changed all of that. Regulators acknowledged that the old R&D tax credits weren't appetizing to founders if it only promised a potential future benefit that may never be realized. And so the R&D tax credit has been revised to give more instant gratification: R&D tax credits generated in 2017 can be used to offset payroll taxes come mid-2018, and R&D tax credits generated in 2018 can be used to reduce payroll taxes in 2019.
The Kruze Consulting R&D Tax Credit Calculator is designed to estimate your R&D tax credit using Federal Form 6765.
Let Kruze Consulting handle your startup's R&D Tax Credit analysis and preparation. We charge a fixed fee of 15% of the anticipated captured credit amount with a minimum fee of $2,000. Kruze Consulting Prices
Caveat: The information on this page intended as general guidance for startups and it doesn’t substitute the need to work with a professional. It’s also a high level overview and is in no way complete. Your company is unique; contact Kruze Consulting.
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Unfortunately, not every company is eligible. You must be creating something new, and by new I mean pass the IRS’ 4 Part Test. Your R&D must be:
Yes. Here are a few:
Your startup must have qualifying R&D expenses (see definition below). Your startup must be new; only startups that have generated revenue for 5 years or less can claim the new tax credit. If you had receipts prior to 2012, then you're ineligible. Your startup must have less than $5 million in revenue in 2018 and each subsequent year that you claim the payroll offset.
Expenses can include:
Follow these steps:
In early 2019, after you've closed out your 2018 books. Work with your CPA on an R&D tax credit study: once you've determined what your tax credit will be, add it to your 2018 annual corporate form 1120 and file the return. In the quarter following your 1120 filing, you can start applying those tax credits to your payroll taxes. For example, if you file your Form 1120 by March 15th, the first payroll tax offset you would receive is for Q2 2019.
You can save about 10 percent of your eligible R&D costs up to two hundred and fifty thousand dollars per year for up to five years. So, if you have about 2.5 million dollars in engineering R&D expenses for last year you can get that full credit.
The information on this page intended as general guidance for startups and it doesn’t substitute the need to work with a professional. It’s also a high level overview and is in no way complete. Your company is unique; contact Kruze Consulting.