Tax Season Credit Changes on the Horizon
The Research Tax Credit form (Form 6765) has undergone significant changes, now requiring more detailed documentation of qualified research expenditures (QREs).
According to Michelle Abel, Baker Tilly principal and credits leader, the biggest change is the level of detail required at filing time. Previously, taxpayers simply reported total QREs without documenting specific research activities, often scrambling to produce documentation during IRS examinations.
Starting with tax year 2024, taxpayers must report:
- The number of business components included in calculations
- Officers' wages included as QREs
- Information about business acquisitions/dispositions
- Any new QRE categories added
- Whether ASC 730 Directive method was used for QRE determination
For 2025, most taxpayers will face additional requirements in Section G, breaking down wages, supplies, contract research, and cloud computing expenses for each business component. This represents a major shift from previous forms where combined dollar amounts were acceptable.
Two exemptions exist for Section G requirements:
- Businesses with QREs ≤ $1.5 million and gross receipts ≤ $50 million
- Qualified small businesses eligible to apply credits against payroll taxes
Abel advises taxpayers to prepare documentation for each business component now, as recreating records years later during an examination becomes challenging when employees leave and records disappear.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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