If qualified start-up companies with research and development activities want to take advantage of the option to offset payroll taxes in the first quarter, the deadline is quickly approaching. Qualified start-up companies have until September 30, 2019, to file their 2018 tax return if they want to offset their payroll taxes in January 2020. Under the current rules, taxpayers cannot take advantage of this opportunity on an amended return. Qualified start-up companies that file their 2018 tax return AFTER September 30, 2019, can still apply for the offset but have to wait until the April 2020.
A qualified start-up company is any company that has gross receipts for five years or less AND total gross receipts for 2018 does not exceed $5M. Qualified start-ups must then complete this three-step process;
· Conduct an R&D Tax Credit Study to obtain a sustainable tax return position
· File Form 6765 with 2018 tax return
· File Form 8974 along with your next Form 941
Please remember many high-tech start-ups can qualify for this credit including digital marketing companies, SaaS companies, information service providers, gaming platforms and many others.
For a free analysis of your potential refunds, please email R&DTaxIncentives@pmba.com or call the R&D Tax Credit Team at 212-835-2218