There were some critical changes to the research and development tax credit for the 2016 tax year. The first has to do with payroll taxes for startups. For a small business to qualify one must have gross receipts of less than $5,000,000 and NOT have had gross receipts for a tax year before 2012. The current year payroll taxes are capped at $250,000. The second major change is the credit will be able to offset AMT (Alternative Minimum Tax). In order to qualify a small business must not be publicly traded, be a partnership or sole proprietorship, and have a three year average annual gross receipts not to exceed $50,000,000. The last significant change gives the credit a little more stability in the fact it was made permanent going forward in 2016. See our R & D Tax Credit page for more detail or give us a call to see if your company qualifies with the new changes.

Scott Steineman, CPA