What is Form 8974?
105 views | Last modified 7/16/2020 4:43:13 AM EST

Applicable To
94X 1099 W-2 ACA W-4

IRS Form 8974 is used to find the qualified small business payroll tax credit amount to increase research and development activities, which can be claimed on the employment tax return. The small business or startup can use this Form 8974 to determine the credit they can use for the particular Form ( 941, 943, or 944).

The employers who made elections on Form 6765, Credit for Increasing Research Activities, can only file Form 8974. Once you have created an election to claim the payroll tax credit on Form 6765, file Form 8974 along with your Form 941, 943, or 944 to claim the qualified small business patrol tax credit to increase the research activities. Without making an election on Form 6765, you can’t request the tax credit if you have attached Form 8974 with your employment tax return.

In TaxBandits, when filing Form 941, if you claim any amount in the Box 11a, Qualified small business payroll tax credit to increase research and development activities, you have to complete Form 8974.

For Quarterly Employment Tax Return filers,

While you file Form 941, you can claim the small business payroll tax credit for research and development purposes. The quarter in which you want to claim the credit should start after filing the income tax return where you made elections on Form 6765. You are allowed to claim this tax credit only from that quarter.

For Annual Federal Tax Return filers,
 
While you file Form 943 or 944, you can claim the allowed small business payroll tax credit for research and development purposes for the elections are made on Form 6765. You can claim this credit only on the same tax year, which includes that quarter and can’t be claimed if it is a different year.

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