The Research and Development (R&D) tax credit allows eligible businesses to offset federal payroll taxes using qualified research expenditures.
How it works
Credit Amount: You can claim up to $250,000 in R&D credits per year against your payroll taxes, which is particularly beneficial for startups and small businesses.
What Can Be Offset: R&D credits directly reduce your:
Federal payroll taxes (employer portion of Social Security taxes)
Federal unemployment taxes (FUTA)
Qualified Activities: Credits apply to expenses related to developing new products, processes, or software, including employee wages, contractor costs, and supply expenses for research activities.
Carryforward: Unused credits can be carried forward for up to 20 years, so you won't lose the benefit if you can't use the full amount immediately.
How do I receive my R&D credits?
Warp's Role: Warp automatically submits your R&D credits form (Form 8974) to the IRS as part of your quarterly payroll tax filings. This ensures your credits are properly claimed without additional paperwork on your end.
💸 IRS Credits by Check
After Warp files your R&D credit claim, the IRS processes it and sends you a refund check by mail at the end of each quarter where the credits apply.
IRS will send this Check to your official business legal address on file.
Timeline: Expect to receive your R&D credit refund check within 4-8 weeks after the end of the applicable quarter, similar to other IRS refund processing times.
What You Need to Do: Simply ensure your R&D expenses are properly tracked and documented. Warp handles the filing process, and you'll receive the credit directly from the IRS by check.
Submit R&D Credit Request in Warp
There's two options to complete this action
For R&D Credit claims, we would need the following documentations/information:
Option 1 (Preferred)
Both following forms must be submitted to [email protected]
Option 2
If company is unable to provide the forms in Option 1, please provide the information below to [email protected]
Income Tax Return Form that included Form 6765. In general, this is Form 1120, but may differ based on the business’ corporate structure
Period End Date of the corporate income tax period
This is the corporate income tax period for which the Income Tax Return is being filed. This will match the last day of the business’ tax year (exp: 12/31/2023 would mean this is an Federal R&D tax credit for the 2023 tax year of the business.)
Date Income Tax Return was Filed
This is the date your CPA/tax accountant filed your Income Tax Return for the applicable corporate income tax period
Annual Federal R&D Tax Credit Amount
This is the total amount of credit the company/Warp will be able to request for the applicable corporate income tax period
Previously Used Credit Amount
This is the credit amount previously requested by the company/CPA/tax accountant outside of Warp's service period. In general, this will be $0.00, unless the company has used another payroll service provider/CPA/tax accountant in the past to partially request the tax credit in question