How to Fill Out Form 6765 (R&D Tax Credit)

To calculate the R&D Tax Credit, you need to complete IRS Form 6765 and include it as a part of your company’s tax return. The challenge is, your CPA can’t do it without YOUR help – you need to give him/her your total Qualified Research Expenses (QREs). The Form can be a little tricky, but fortunately, we’re here to help.

Form 6765 has four sections. You will complete either section A or section B before completing section C and possibly section D if you qualify. We recommend running the calculation for both Section A and B and choosing whichever method gives you the larger credit.

Section A – Regular Credit

The Regular Credit equals 20% of a taxpayer’s current-year Qualified Research Expenses (QREs) that are more than the calculated base amount. This can be quite complicated depending on your tax situation.

Section B – Alternative Simplified Credit

You can avoid the headache of regular credit by leveraging the Alternative Simplified Credit (ASC). The ASC is simply 6% of your total QREs (for your first three years of claiming the Credit).

Section C – Current Year Credit

Section C takes the credit you calculated in either Section A or Section B and addresses potential difficulties that may arise based on your specific tax situation. Fortunately, most taxpayers can ignore most of this section. If you’re unsure how to handle this, give us a call, and we’ll walk you through it based on your facts.

Section D—Qualified Small Business Payroll Tax Election and Payroll Tax Credit

Complete this section only if you are making this payroll tax election. The payroll tax credit is an election for small businesses that can claim research expenses and apply up to $250,000 of research credit to offset social security payroll tax liability. It is important to note that filing Form 3800 is also required if you’re a qualified small business other than a partnership or an S corporation.

To make this election in Section D, you need to make sure you are a Qualified Small Business. To qualify as a small business, you must be in business for less than five years, and this year’s gross receipts must be less than $5 million. Give us a call if you need help exploring this.

Was that overwhelming or complicated? Follow the below infographic, then once you have a rough idea of the numbers, fill out the form. From there, we will complete Form 6765 for you for FREE!