The new Path Act which was passed in Congress December 2015 kicks in effective for tax year 2016.  One significant new provision is that start up companies can use up to $250,000 in R&D credits against their 2017 quarterly payoll tax liabilities.

Do you Qualify?

This benefit applies to ‘start up companies’ who wish to claim the R&D tax credit, which means under the Path Act that the company cannot have any receipts on a tax return earlier than 2012 (i.e., 2011 tax return or earlier). So if you company qualifies as a start up as of your 2016 year, you can claim an R&D credit on your originally filed return filed in March/April 2017 depending on your corporate structure, then start using up to $250k in R&D tax credits against Q2 and later quarters (applied against the FICA portion of payroll tax which is the 6.2% employer portion).

Note the IRS is updating the appropriate forms to take advantage of this new payroll tax offset.

Need professional guidance or an R&D study done to take advantage of these R&D credits? Call us today at (800) 792-4861.

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