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When Must You File?

January 31, 2018, is the first year on which you can claim

the credit.

If You File Form 941...

Specific Instructions

You can first claim the qualified small business payroll tax

credit for increasing research activities on the Form 941

Enter Your Business Information

for the quarter that begins after you file your income tax

return that makes the election on Form 6765. The Form

Enter your employer identification number (EIN) and name

941 for that quarter is the Form 941 on which you are

at the top of Form 8974. Make sure that they exactly

required to claim the qualified small business payroll tax

match the name of your business and the EIN that the IRS

credit for increasing research activities for the amount

assigned to your business and also match the name and

elected as a research payroll tax credit on Form 6765.

EIN shown on Form 941, 943, or 944. Also check a box to

You can’t claim the credit related to this election on a

tell us on which form you'll take the credit from Part 2,

different quarter’s Form 941 unless it is to take a

line 12.

carryforward credit from the required quarter, as

If you are filing Schedule R with Form 941 or Form

determined on Form 8974.

943, the EIN entered at the top of each client’s or

Example for Form 941 filers. If you file your 2017

customer’s Form 8974 must be the EIN of the

CAUTION

income tax return based on a calendar year (January 1–

client or customer.

December 31) on March 15, 2018, the 2018 second

quarter (April 1, 2018–June 30, 2018) Form 941, which is

Calendar Year

filed by July 31, 2018, is the first quarter that you can take

Enter the calendar year as shown on the attached Form

the qualified small business payroll tax credit for

941, 943, or 944.

increasing research activities.

Check the Box for the Quarter (Forms

The payroll tax credit must generally be elected on an

original income tax return that is timely filed (including

941, 941-PR, and 941-SS Only)

extensions). However, Notice 2017-23 provides a limited

Under Report for this quarter at the top of Form 8974,

exception to that rule, allowing a qualified small business

check the appropriate box of the quarter for which you’re

that timely files its income tax return for a tax year

filing Form 8974. The quarter must match the quarter as

beginning after December 31, 2015, but fails to make the

shown on Form 941.

payroll tax credit election, to make the election on an

amended income tax return filed on or before December

Part 1: Tell Us About Your Income Tax

31, 2017. The Form 6765 filed with that amended income

Return

tax return must meet certain procedural requirements

provided in section 4.02 of Notice 2017-23. If the payroll

tax credit is elected on an amended income tax return

Lines 1–5

filed under Notice 2017-23, the payroll tax credit is

The payroll tax credit election on Form 6765 is limited to 5

allowed against the employer share of social security tax

tax years (including if members of your controlled group

for the quarter that begins after the amended income tax

previously made the election). Use lines 1–5 to report the

return is filed. The payroll tax credit can't be applied to an

credit from each tax year. Enter the income tax years in

earlier quarter.

chronological order. You must continue to report each

income tax year election until the remaining credit (column

If You File Form 943 or 944...

(g)) for the income tax year reaches zero.

You can first claim the qualified small business payroll tax

credit for increasing research activities on the Form 943 or

Column (a)

944 for the year that includes the quarter that begins after

Enter the ending date of your income tax period. Enter the

you file your income tax return that makes the election on

date as “MM/DD/YYYY.” For example, if your 2017

Form 6765. The Form 943 or 944 for the year that

income tax return was for a calendar year, enter

includes that quarter is the Form 943 or 944 on which you

“12/31/2017.” If your income tax return was for a fiscal

are required to claim the qualified small business payroll

year that ended on June 30, 2017, enter “06/30/2017.”

tax credit for increasing research activities for the amount

elected as a research payroll tax credit on Form 6765.

Column (b)

You can’t claim the credit related to this election on a

Form 943 or 944 for a different year unless it is to take a

Tell us which income tax return you filed that elected a

carryforward credit from the required year, as determined

qualified small business payroll tax credit on Form 6765.

on Form 8974.

Form 6765 can be attached to Form 1040, 1065, 1120,

1120-F, or 1120S.

Example for Form 943 or 944 filers. If you filed your

2016 income tax return based on a calendar year

(January 1–December 31) on March 15, 2017, the 2017

Column (c)

second quarter (April 1, 2017–June 30, 2017) is the first

Tell us the date that you filed your income tax return that is

quarter that you can take the qualified small business

shown in column (b). Enter the date as “MM/DD/YYYY”

payroll tax credit for increasing research activities.

(for example, “03/15/2018”).

Therefore, the 2017 Form 943 or 944, which is filed by

-2-

Instructions for Form 8974 (Rev. 12-2017)

Instructions For Form 8974 - Qualified Small Business Payroll Tax Credit For Increasing Research Activities Page 2

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