October 9, 2017

What Happens if I Don’t File My Taxes on Time?

IRS officials said it made this rule to benefit small businesses that may have very little to no income tax liability, and allow them to benefit from applying the credit to other areas of their taxes. Government officials hope this will help small businesses grow profitable more quickly, as well as boost job creation.

The IRS defines research and development costs as “all expenditures incident to the development or improvement of a product.” It does not include marketing, surveys, management studies or some other costs. Details about how the IRS defines research and development costs are available on the IRS website.

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Tax Planning Para Head

According to the IRS website, any corporation or partnership whose gross receipts for the taxable year are less than $5,000,000, and which has not had gross receipts dating back further than five years, qualifies for this special tax application.

If this applies to your business, you can choose to apply up to $250,000 of your research credit toward your business’s payroll tax credit, or social security contributions for employees.

Tax Planning Para Head

Once you have determined your business meets the criteria, you must fill out IRS form 6765 for Increasing Research Activities, and attach it to your on-time tax return.

To apply the credit toward your business’s payroll taxes, you then fill out form 8974 and attach it to the Employer’s Quarterly Federal Tax Return, which is usually Form 941.

Late tax returns that have been approved for a filing extension can also still qualify.

Tax Planning Para Head

If you are just now realizing that your business qualified under the Increased Research Activity, but you already filed your returns without exercising it, you can still file an amended return. Re-do your tax return and add form 6765 before Dec. 31, 2017, and you can still take advantage of the new tax application.

Tax Planning H2 Para Head

You can consult this section of the IRS website for guidance on questions about whether your business qualifies, how to determine your gross receipts, what choices you have for applying for your tax credits, and much more.

Closing statement Wendroff & Associates, CPA we look at your company’s goals, and help you create long and short-term strategies to capitalize on the ever-evolving tax code in order to grow your business efficiently and successfully. Closing Text

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