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Instructions for Form 8974

Department of the Treasury

Internal Revenue Service

(Rev. December 2017)

Qualified Small Business Payroll Tax Credit for Increasing Research Activities

Section references are to the Internal Revenue Code

claim the qualified small business payroll tax credit for

unless otherwise noted.

increasing research activities against your payroll taxes.

The election is made on Form 6765, Credit for Increasing

Future Developments

Research Activities. If you haven’t filed the income tax

return making the election to claim the payroll tax credit on

For the latest information about developments related to

Form 6765, you can’t file Form 8974 and can’t claim the

Form 8974 and its instructions, such as legislation

qualified small business payroll tax credit for increasing

enacted after they were published, go to

IRS.gov/

research activities against your payroll taxes on Form 941,

Form8974.

943, or 944.

What’s New

You can’t claim the qualified small business

Credit added to Forms 943, 943-PR, 944, and

payroll tax credit for increasing research activities

944(SP). The qualified small business payroll tax credit

on a Form 941, 943, or 944 unless you make the

CAUTION

for increasing research activities can be claimed on the

election on Form 6765 and then file a Form 8974 attached

2017 Form 943, Employer’s Annual Federal Tax Return

to Form 941, 943, or 944.

for Agricultural Employees; 2017 Form 943-PR, Planilla

para la Declaración Anual de la Contribución Federal del

Aggregate Form 941

Patrono de Empleados Agrícolas; 2017 Form 944,

If you’re a Section 3504 agent or a certified professional

Employer’s ANNUAL Federal Tax Return; and 2017 Form

employer organization (CPEO), you must complete

944(SP), Declaración Federal ANUAL de Impuestos del

Schedule R (Form 941), Allocation Schedule for

Patrono o Empleador.

Aggregate Form 941 Filers, when filing an aggregate

Form 8974, Part 1, redesigned. Part 1 of Form 8974

Form 941. Additionally, you must attach a Form 8974 for

has been redesigned to allow reporting of income tax

each client that is taking the qualified small business

return information for up to 5 years. Part 1 also tracks the

payroll tax credit for increasing research activities. See

amount of credit that has been used or is remaining for

the instructions for

Line 8

and

Line

9, later, for more

use as a carryforward credit.

information.

Notice 2017-23. Notice 2017-23, 2017-16 I.R.B. 1100,

Aggregate Form 943

available at IRS.gov/irb/2017-16_IRB/ar07.html, provides

If you’re a Section 3504 agent or a CPEO, you must

interim guidance on the qualified small business payroll

complete Schedule R (Form 943), Allocation Schedule for

tax credit for increasing research activities.

Aggregate Form 943 Filers, when filing an aggregate

Form 943. Additionally, you must attach a Form 8974 for

General Instructions

each client that is taking the qualified small business

payroll tax credit for increasing research activities. See

Purpose of Form 8974

the instructions for

Line

8, later, for more information.

Use Form 8974 to determine the amount of the qualified

Correcting Form 8974

small business payroll tax credit for increasing research

activities that you can claim on Form 941, Employer’s

Form 8974 filed with Form 941. If you discover an error

QUARTERLY Federal Tax Return; Form 941-SS,

on a previously filed Form 8974, make the correction by

Employer’s QUARTERLY Federal Tax Return (American

filing Form 941-X, Adjusted Employer’s QUARTERLY

Samoa, Guam, the Commonwealth of the Northern

Federal Tax Return or Claim for Refund, with a corrected

Mariana Islands, and the U.S. Virgin Islands); Form

Form 8974. For more information, see the Instructions for

941-PR, Planilla para la Declaración Federal

Form 941-X.

TRIMESTRAL del Patrono; Form 943; Form 943-PR;

Form 8974 filed with Form 943 or 944. If you discover

Form 944; or Form 944(SP). This payroll tax credit is a

an error on a previously filed Form 8974, make the

credit against the employer portion of social security tax

correction by filing Form 943-X, Adjusted Employer’s

on the wages of your employees.

Annual Federal Tax Return for Agricultural Employees or

All references to Form 941 in these instructions also

Claim for Refund, or Form 944-X, Adjusted Employer’s

apply to Forms 941-SS and 941-PR. All references to

ANNUAL Federal Tax Return or Claim for Refund, as

Form 943 in these instructions also apply to Form 943-PR.

applicable, with a corrected Form 8974. For more

All references to Form 944 in these instructions also apply

information, see the Instructions for Form 943-X or the

to Form 944(SP).

Instructions for Form 944-X.

Who Must File Form 8974?

You must file Form 8974 and attach it to Form 941, 943, or

944 if you made an election on your income tax return to

Dec 04, 2017

Cat. No. 68750R

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

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