Qualified Small Business R&D Payroll Tax Credit Provides up to $250,000 in Annual Savings for Startup Companies

  • What is it?
    The Qualified Small Business (QSB) R&D Payroll Tax Credit is a tax incentive geared specifically for early-stage technology companies. The credit can be used to offset payroll tax, either instead of or in addition to income tax.
  • What does it do?
    The QSB Payroll Tax Credit reduces early-stage companies U.S. labor costs up to 6.2% (capped at $250,000). Now, eligible small businesses can take advantage of a new option enabling them to apply part or all of their research credit against their payroll tax liability, instead of their income tax liability. Qualified companies may claim these credits on 2016 federal income tax returns and apply these credits against OASDI payroll taxes in 2017. OASDI costs U.S. employers 6.2% of wages up to $7,886 per year per employee.
  • Who qualifies?
    A “Qualified Small Business” is defined as any company with less than 5 years of revenues and less than $5MM in the current year of revenues with qualifying research activities and expenditures.
  • What if my company doesn’t qualify?
    There are many other tax credits and incentives that may be available to you.
  • What companies are the best candidates?
    Any early-stage company with at least $300K in annual wages that engages in research or technology development is a good candidate.
  • When do companies need to act?
    Qualified companies can first take advantage of the incentive starting with the 2016 tax year (filed in calendar year 2017). All 2016 credits (including those claimed on an amended income tax return) MUST be claimed by 12/31/2017. However, the sooner the credit is claimed, the sooner a company can begin realizing the savings.
  • How do I get more information?
    Download an overview of the QSB tax credit here or contact us at 866-244-4170 or info@trcgadvisors.com.

Don’t hesitate as time may be running out to claim savings for 2016!

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