For a business to receive the R&D payroll tax credit, they must file the correct forms by specific deadlines provided by the IRS. If the business fails to submit these forms within the quarterly filing dates, it must file an amended Form 941-X with Form 8974 attached.
Quarterly Filing Dates
Quarterly filing dates depend on the type of business and which state you live in. Make sure you check with the IRS for your specific filing dates. Here are the estimated quarterly filing dates for 2022:
- First Quarter: April 18, 2022
- Second Quarter: June 15, 2022
- Third Quarter: September 15, 2022
- Fourth Quarter: January 17, 2023
Important Tax Forms
It is essential to understand all the required forms a business needs to file before it can claim the payroll credit. Without these forms, a business cannot claim the payroll credit regardless of being late or not.
Business owners file Form 6765 in Quarter 1 to figure, elect, and claim the credit for increasing research activities. A business must have filed Form 6765 in quarter one or have an open extension. A business could not claim the payroll credit if it did not file its 6765 or does not have an open extension.
The business reports Line 12 from this form on line 11a of Form 941. If a late filing occurs, the business will report Line 12 using Line 16 of 941-X instead.
Business owners file Form 941 to report income, Medicare, and Social Security taxes withheld from their employee’s paychecks. This form also pays the employer’s portion of Medicare and Social Security taxes.
Form 8974 is used to determine the actual dollar amount a business will receive when claiming the R&D payroll tax credit they elected on form 6765 in Quarter 1. It also determines the amount of the payroll tax credit the business used and how much of the payroll credit the business has left for future utilization. They then attach this form with Form 941 on their quarterly Federal Tax Return.
Process For Filing A Late Form 8974
In this scenario, a business files Form 6765 in Quarter 1. During Quarter 2, the business filed Form 941 but forgot to attach Form 8974. The below procedure explains how this business can file a late Form 8974, so they can still claim the payroll tax credit.
- For a business to receive the payroll tax credit claimed on Form 941, it must also file form 8974. If the taxpayer didn’t file Form 8974, they must file an amended 941-X with Form 8974 attached.
- The IRS states that a business must submit an amended return no more than three years from the date they filed Form 941 and that a business must submit an amended return no more than two years from the date the business paid the tax, whichever is greater.
- A business must file Form 8974 every quarter until fully utilizing the R&D tax credit.
- It takes between 6-8 weeks from all forms being submitted to the IRS for a business to receive the R&D payroll tax credit.
Filing business taxes with all the proper forms during the specified filing dates can be highly confusing and cost a business valuable payroll credit. It is still possible for a business to claim the payroll credit if they failed to attach Form 8974 with Form 941 during their Quarter 2 filings. The instructions above include all the necessary steps for a business to do so correctly.