Earlier this year, we here at BioKansas heard about a change to the R&D Tax Credit that could have a significant impact on the finances of many of our smallest and most innovative members. You see, until recently, the R&D tax credit could only be used to offset income tax. Therefore, even though many start-up and early stage companies were eligible for the credit, they could not take advantage of it because they did not pay income taxes. As of the 2016 tax year, eligible start-up companies can use the credit to offset up to $250,000 per year in payroll taxes.
Because of this significant change, BioKansas is teaming up with RubinBrown to host a Lunch & Learn focused on educating our members on the awesome opportunity the changes to the R&D Tax Credit present. We hope you'll join us next Thursday, September 28th, from 11:30 am to 1 pm for free lunch, a breakdown of the opportunity and how to go about making sure your company is taking advantage of credit.
In the meantime, here's a short synopsis of the credit, courtesy of RubinBrowns' own Richard Wile:
"On March 30, 2017, the IRS released interim guidance explaining how eligible small businesses can take advantage of the Research & Experimentation (R&E or R&D) tax credit by electing to offset their 2017 payroll tax liability instead of their income tax liability. Previously, the R&E tax credit could only be used to offset income tax liability. This prevented many startup companies from taking advantage of the R&E tax credit since they are often in a pre-revenue or early stage revenue phase and paying little or no income tax.
The R&E tax credit is a dollar for dollar reduction of tax. The net benefit of the credit is approximately 6% of qualified expenditures coming from qualified wages, supplies and contract research. The payroll tax credit is claimed on the 941 payroll tax return filed on the quarter following that in which the corporate return was filed. Excess credits can be carried forward to subsequent reporting periods.
If a qualified small business timely files its 2016 return without making the payroll tax credit election, it may make the election on an amended return filed on or before December 31, 2017."
Come out and JOIN US next Thursday, September 28th, from 11:30 am to 1 pm to hear more about the changes and how your company might benefit.
-Dennis Ridenour, CEO of BioKansas