About IRS Form 8974:

Qualified Small Business Payroll Tax Credit for Increasing Research Activities 

Business owners use IRS Form 8974 to determine the amount of qualified small business payroll tax credit for increasing research activities they can claim on their employment tax returns.

According to the IRS, If you made an election on your income tax return to claim “the qualified small business payroll tax credit for increasing research activities” against your payroll taxes, you need to file the 8974 Form and attach it to Form 941 (Employer’s Quarterly Federal Tax Return), 943 (Employer’s Annual Federal Tax Return for Agricultural Employees), or 944 (Employer’s ANNUAL Federal Tax Return). 

You can find the IRS form 8974 instructions here

The payroll tax credit must be elected on an original income tax return that is timely filed (including extensions) and also elected on Form 6765, Credit for Increasing Research Activities. 

Note: You need to file the income tax return making the election to claim the payroll tax credit on Form 6765 (step 1), before you can file Form 8974 (step 2) and claim the qualified small business payroll tax credit for increasing research activities against your payroll taxes on Form 941, 943, or 944 (step 3). 

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