What Is a Research Tax Credit?
In the United States, self-employed taxpayers who operate businesses and file a Schedule C with their Form 1040 may qualify for a tax credit if they meet certain requirements.
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Qualifications
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According to the General Instructions for Form 6765, "an individual, estate, trust, organization or corporation" must file this form if they claim a credit for increasing their research activities. Additionally, "any S corporation, partnership, estate or trust that allocates the credit to its shareholders, partners or beneficiaries" must file.
Types of Research
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The IRS limits this tax credit to research activities that are experimental in nature and undertaken for the purpose of developing new or improved technology for the business. Expenditures should be claimed on Form 6765
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Filling Out Form 6765
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According to its "General Instructions", Form 6765 has three sections. Section A allows for the Regular Credit and the other two cover Incremental Credit and Simplified Credit. Taxpayers who elect (or have elected in the past) the Incremental or Simplified Credit will not use Section A.
Filling Out Form 3800
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Preparation of Form 6765 results in a final amount for the research tax credit, on either Line 64 or 65, which should then appear on Line 1c of Form 3800, entitled "General Business Credit".
Filling Out Form 1040
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According to "Your Income Tax 2010", the amount for research tax credit, as calculated on Line 32, Page 3 of Form 3800, should then appear on Line 53 of Form 1040.
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References
Resources
- Photo Credit tax form image by Kirill Zdorov from Fotolia.com
