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فرم 8974 دستورالعمل ها

دستورالعمل برای فرم 8974، اعتبار مالیات بر درآمد کسب و کار کوچک واجد شرایط برای افزایش فعالیت های تحقیقاتی

بازبینی شده در دسامبر 2023

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  • فرم 8974 - اعتبار مالیاتی Small Business Payroll برای افزایش فعالیت های تحقیقاتی
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Department of the Treasury  
Internal Revenue Service  
Instructions for Form 8974  
(Rev. December 2023)  
Qualified Small Business Payroll Tax Credit for Increasing Research Activities  
Section references are to the Internal Revenue Code  
unless otherwise noted.  
share of social security tax and the employer share of  
Medicare tax, is then carried forward to the next quarter.  
For more information about the payroll tax credit, go to  
Future Developments  
For the latest information about developments related to  
Form 8974 and its instructions, such as legislation  
enacted after they were published, go to IRS.gov/  
General Instructions  
Purpose of Form 8974  
Use Form 8974 to determine the amount of the qualified  
small business payroll tax credit for increasing research  
activities that you can claim on Forms 941, 943, or 944.  
These filers will also have the option to file the related  
forms such as the corresponding non-English language  
forms for all forms within the related series.  
What’s New  
Forms 941-PR, 941-SS, 943-PR, and 944 (sp) referen-  
ces removed. Beginning with filings for tax year 2023,  
former filers of Form 943-PR will instead file Form 943,  
Employer's Annual Federal Tax Return for Agricultural  
Employees. These filers will also have the option to file the  
new Spanish-language Form 943 (sp). Form 943-PR is  
being discontinued. Beginning with filings for the first  
quarter of 2024, former filers of Form 941-SS will instead  
file Form 941, Employer’s QUARTERLY Federal Tax  
Return, issued in and for the first quarter of 2024. These  
filers will also have the option to file the new  
Where authority is granted for any form, it is also  
effective for related forms such as the corresponding  
non-English language form. For example, Form 8974 can  
be used to provide authorization for Form 941 (sp) using  
the entry spaces for Form 941.  
Who Must File Form 8974?  
Spanish-language Form 941 (sp). The new Form 941 (sp)  
will also similarly replace Form 941-PR, which is being  
discontinued along with Form 941-SS. Form 941 (sp), 943  
(sp), and 944 (sp) will be usable by any employer that  
prefers their form in Spanish, whether they are located in  
the United States, Puerto Rico, or one of the other  
territories. Where authority is granted for any form, it is  
also effective for related forms such as the corresponding  
non-English language form.  
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  
claim the qualified small business payroll tax credit for  
increasing research activities against your payroll taxes.  
The payroll tax credit must be elected on an original  
income tax return that is timely filed (including  
extensions). The election is made on Form 6765. If you  
haven’t filed the income tax return making the election to  
claim the payroll tax credit on Form 6765, you can’t file  
Form 8974 and can’t claim the qualified small business  
payroll tax credit for increasing research activities against  
your payroll taxes on Form 941, 943, or 944.  
Reminders  
The qualified small business payroll tax credit for in-  
creasing research activities has increased and been  
modified. For tax years beginning before January 1,  
2023, a qualified small business may elect to claim up to  
$250,000 of its credit for increasing research activities as  
a payroll tax credit. The Inflation Reduction Act of 2022  
(the IRA) increases the election amount to $500,000 for  
tax years beginning after December 31, 2022. The payroll  
tax credit election must be made on or before the due date  
of the originally filed income tax return (including  
You can’t claim the qualified small business  
payroll tax credit for increasing research activities  
!
CAUTION  
on Form 941, 943, or 944 unless you make the  
election on Form 6765 and then file Form 8974 attached  
to Form 941, 943, or 944.  
Aggregate Form 941 or Form 943  
If you're a section 3504 agent or a certified professional  
employer organization (CPEO), you must complete  
Schedule R (Form 941), Allocation Schedule for  
extensions). The portion of the credit used against payroll  
taxes is allowed in the first calendar quarter beginning  
after the date that the qualified small business filed its  
income tax return. The election and determination of the  
credit amount that will be used against the employer's  
payroll taxes are made on Form 6765, Credit for  
Aggregate Form 941 Filers, when filing an aggregate Form  
941, or Schedule R (Form 943), Allocation Schedule for  
Aggregate Form 943 Filers, when filing an aggregate Form  
943. Other third-party payers that file an aggregate Form  
941 or 943, such as non-certified PEOs, must complete  
and file Schedule R if they have clients that are claiming  
the qualified small business payroll tax credit for  
Increasing Research Activities. The amount from Form  
6765, line 44, must then be reported on Form 8974.  
Starting in the first quarter of 2023, the payroll tax credit  
is first used to reduce the employer share of social  
increasing research activities. For you to claim the credit,  
your client must be a qualified small business and must  
elect to apply the research credit against payroll tax  
liability by attaching Form 6765 to its timely filed income  
security tax up to $250,000 per quarter and any remaining  
credit reduces the employer share of Medicare tax for the  
quarter. Any remaining credit, after reducing the employer  
Dec 6, 2023  
Cat. No. 68750R  
tax return. Additionally, you must attach a Form 8974 for  
each client that is taking the credit. See the instructions for  
Line 8, Line 9, and Line 14, later, for more information.  
Also, go to IRS.gov/ResearchPayrollTC for more  
information.  
Specific Instructions  
Enter Your Business Information  
Enter your employer identification number (EIN) and name  
at the top of Form 8974. Make sure that they exactly  
match the name of your business and the EIN that the IRS  
assigned to your business and also match the name and  
EIN shown on Form 941, 943, or 944. Also check a box to  
tell us on which form you'll take the credit from Part 2,  
line 12 or, if applicable, line 17. Check only one box.  
Correcting Form 8974  
If you discover an error on a previously filed Form 8974,  
make the correction by filing Form 941-X, Adjusted  
Employer's QUARTERLY Federal Tax Return or Claim for  
Refund; Form 943-X, Adjusted Employer's Annual Federal  
Tax Return for Agricultural Employees or Claim for Refund;  
or Form 944-X, Adjusted Employer's ANNUAL Federal Tax  
Return or Claim for Refund, as applicable. Attach a  
corrected Form 8974 to your amended return. For more  
information, see the instructions for Form 941-X, 943-X, or  
944-X.  
If you’re filing Schedule R with Form 941 or Form  
943, the EIN entered at the top of each client’s or  
!
CAUTION  
customer’s Form 8974 must be the EIN of the  
client or customer.  
Calendar Year  
When Must You File?  
Quarterly Form 941 Filers  
Enter the calendar year as shown on the attached Form  
941, 943, or 944.  
Check the Box for the Quarter (Forms  
941 Series Only)  
You can first claim the qualified small business payroll tax  
credit for increasing research activities on the Form 941  
for the quarter that begins after you file your income tax  
return that makes the election on Form 6765. The Form  
941 for that quarter is the Form 941 on which you’re  
required to claim the credit. You can’t claim the credit  
related to this election on a different quarter’s Form 941  
unless it is to take a carryforward credit from the required  
quarter, as determined on Form 8974.  
Example for Form 941 filers. If you file your 2023  
income tax return based on a calendar year (January 1–  
December 31) on March 15, 2024, the 2024 second  
quarter (April 1, 2024–June 30, 2024) Form 941, which is  
filed by July 31, 2024, is the first quarter that you can take  
the qualified small business payroll tax credit for  
increasing research activities.  
Under Report for this quarter at the top of Form 8974,  
check the appropriate box of the quarter for which you’re  
filing Form 8974. The quarter must match the quarter as  
shown on Form 941. Check only one box.  
Part 1: Tell Us About Your Income Tax  
Return  
Lines 1–5  
The payroll tax credit election on Form 6765 is limited to 5  
tax years (including if members of your controlled group  
previously made the election). Use lines 1–5 to report the  
credit from each tax year. Enter the income tax years in  
chronological order with the earliest year entered on  
line 1. You must continue to report each income tax year  
election until the remaining credit (column (g)) for the  
income tax year reaches zero.  
Annual Form 943 or 944 Filers  
You can first claim the qualified small business payroll tax  
credit for increasing research activities on the Form 943 or  
944 for the year that includes the quarter that begins after  
you file your income tax return that makes the election on  
Form 6765. The Form 943 or 944 for the year that includes  
that quarter is the Form 943 or 944 on which you’re  
required to claim the credit. 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 carryforward credit from the  
required year, as determined on Form 8974.  
Column (a)  
Enter the ending date of your income tax period. Enter the  
date as “MM/DD/YYYY.” For example, if your 2023 income  
tax return was for a calendar year, enter “12/31/2023.If  
your income tax return was for a fiscal year that ended on  
June 30, 2023, enter “06/30/2023.”  
Example for Form 943 or 944 Filers. If you filed your  
2023 income tax return based on a calendar year  
(January 1–December 31) on March 15, 2024, the 2024  
second quarter (April 1, 2024–June 30, 2024) is the first  
quarter that you can take the qualified small business  
payroll tax credit for increasing research activities.  
Therefore, the 2024 Form 943 or 944, which is filed by  
January 31, 2025, is the first year on which you can claim  
the credit.  
Column (b)  
Tell us which income tax return you filed that elected a  
qualified small business payroll tax credit on Form 6765.  
Form 6765 can be attached to Form 1040, 1065, 1120,  
1120-F, or 1120-S.  
Column (c)  
Tell us the date that you filed your income tax return that is  
shown in column (b). Enter the date as “MM/DD/YYYY”  
(for example, “03/15/2024”).  
-2-  
Instructions for Form 8974 (Rev. 12-2023)  
amount from your 2023 income tax return, and enter  
$100,000 in column (g). You complete lines 7–17 and  
learn that you can only use $75,000 of the credit for the  
second quarter of 2024. You have a $25,000 carryforward  
to the third quarter of 2024.  
On the Form 8974 that you attach to your third quarter  
2024 Form 941, you’ll enter on line 1, columns (a)–(d), the  
same information (your 2023 income tax return  
Column (d)  
If the EIN used on Form 8974 isn’t the same as the EIN  
used on Form 6765, enter the EIN that was used on Form  
6765. Generally, the EIN used on Form 8974 should be  
the same as the EIN used on Form 6765. However, if  
you’re a member of a controlled group of corporations (as  
defined in sections 41(f)(1)(A) and (f)(5)) or a member of a  
group of trades or businesses under common control (as  
defined in section 41(f)(1)(B) and Regulations section  
1.41-6(a)(3)(ii)), the EIN used on Form 6765 may be  
different from the EIN that you must use on Form 8974.  
information) that you reported on the previously filed Form  
8974, line 1, columns (a)–(d) (the Form 8974 that you  
attached to your second quarter 2024 Form 941). You’ll  
enter $100,000 in column (e) (same as you did for the  
second quarter of 2024) but now you must also enter  
$75,000 in column (f) because this is the amount of the  
credit from column (e) that you claimed in a previous  
period. You’ll enter $25,000 in column (g), which is your  
carryforward from the prior quarter.  
Column (e)  
Generally, enter the amount from Form 6765, line 44.  
However, if you’re a member of a controlled group of  
corporations (as defined in sections 41(f)(1)(A) and (f)(5))  
or a member of a group of trades or businesses under  
common control (as defined in section 41(f)(1)(B) and  
Regulations section 1.41-6(a)(3)(ii)), enter the amount of  
the credit that was allocated to your EIN. As a member,  
your credit is determined on a proportionate basis to your  
share of the aggregate qualified research expenses for  
increasing research activities taken into account by the  
group for the research credit. The amount entered in  
column (e) may not exceed $250,000 for each income tax  
year beginning before January 1, 2023. For each income  
tax year beginning after December 31, 2022, the amount  
entered in column (e) may not exceed $500,000.  
The discussion under Carryforward above also  
applies to Forms 943 and 944. However, the  
remaining credit from one year is carried forward  
TIP  
to the following year.  
Additional years. If you claim the payroll tax credit on  
Form 6765 on an additional year's income tax return, you’ll  
enter the additional payroll tax credit using the additional  
rows in Part 1, with the earliest year entered on line 1.  
There are 5 rows in Part 1 because the payroll tax credit  
election is limited to 5 tax years. While the amount you  
enter in column (e) may not exceed $250,000 per row for  
each income tax year beginning before January 1, 2023,  
and $500,000 for each income tax year beginning after  
December 31, 2022, the total amount entered on line 6,  
column (g), and line 7 may exceed $500,000 if you  
claimed the credit in multiple years and you're still carrying  
forward unused credit from earlier years.  
Column (f)  
Enter the amount of the credit from column (e) that was  
taken in a previous period or previous periods.  
Part 2: Determine the Credit That You  
Can Use This Period  
Column (g)  
Subtract column (f) from column (e) and enter the result in  
column (g). Add all of the amounts in column (g) of lines  
1–5, and enter the result on line 6, column (g). This is the  
total amount of credit you have available for the current  
quarter (Form 941) or year (Form 943 or 944).  
Carryforward. If the qualified small business payroll tax  
credit for increasing research activities reported in column  
(e) can’t be fully used in the first quarter after the income  
tax return is filed because it was limited to the amount of  
the employer share of social security tax (and the  
employer share of Medicare tax for quarters beginning  
after December 31, 2022) on the wages of your  
employees for the quarter, you can carry forward any  
unused amount to the next quarter. If, in the next quarter  
the amount carried over from the first quarter can’t be fully  
used, then you can carry forward any unused amount to  
subsequent quarters.  
Example. You elected to take $100,000 as a qualified  
small business payroll tax credit for increasing research  
activities when you filed your 2023 income tax return on  
March 15, 2024. On the Form 8974 that you attach to your  
second quarter 2024 Form 941, you enter $100,000 in  
column (e), leave column (f) blank because the second  
quarter of 2024 is the first time you’re using the elected  
Line 7  
Enter the amount from Part 1, line 6, column (g).  
Line 8  
Enter the amount from Form 941, line 5a, column 2; Form  
943, line 3; or Form 944, line 4a, column 2. This is the total  
amount of social security tax on wages.  
If you’re filing an aggregate Form 941 or 943, you  
must file a Form 8974 for each client that is taking  
!
CAUTION  
the qualified small business payroll tax credit for  
increasing research activities. Also, you can’t enter the  
amount from Form 941, line 5a, column 2; or Form 943,  
line 3, on line 8 of any of the Forms 8974 that are attached  
to the aggregate Form 941 or 943. This portion of the  
credit is based on each employer’s liability for social  
security tax. Therefore, you must enter on line 8 of each  
client’s Form 8974 the amount that the client would’ve  
reported on Form 941, line 5a, column 2; or Form 943,  
line 3, if the client filed its own Form 941 or 943. See  
additional adjustments you may need to make if you file  
Form 943.  
Instructions for Form 8974 (Rev. 12-2023)  
-3-  
   
Line 9  
Line 11 (before considering Form 941, line 8)  
– Amount of social security tax included on Form 941, line 8  
Enter the amount from Form 941, line 5b, column 2; or  
Form 944, line 4b, column 2. This is the total amount of  
social security tax on tips.  
= Final amount to enter on line 11  
If you’re filing an aggregate Form 941, you must  
Example. You entered $12,400 on Form 8974, line 8,  
and zero on line 9. Line 10 was also $12,400. 50% of  
line 10 is $6,200. However, this amount must be adjusted  
because you reported $6,120 ($4,960 of social security  
tax and $1,160 of Medicare tax) on Form 941, line 8. You  
must subtract $4,960 (amount of social security tax  
reported on Form 941, line 8) from $6,200 (50% of the  
amount reported on line 10) and enter $1,240 on line 11.  
Adjustment if you didn’t transfer liability. If you didn’t  
transfer the liability for the employer’s share of social  
security tax to the employer (client) and you paid the  
employer social security tax on the third-party sick pay  
that you paid on behalf of the client, you must reduce the  
amount reported on line 11 by any employer social  
security tax (included on Form 941, line 5a, column 2) that  
was for the employees of the client.  
file a Form 8974 for each client that is taking the  
!
CAUTION  
qualified small business payroll tax credit for  
increasing research activities. Also, you can’t enter the  
amount from Form 941, line 5b, column 2, on line 9 of any  
of the Forms 8974 that are attached to the aggregate  
Form 941. This portion of the credit is based on each  
employer’s liability for social security tax. Therefore, you  
must enter on line 9 of each client’s Form 8974 the  
amount that the client would’ve reported on Form 941,  
line 5b, column 2, if the client filed its own Form 941.  
Line 10  
Add lines 8 and 9. Enter the result on line 10.  
Line 11  
Multiply line 10 by 50% (0.50). The first $250,000 of the  
qualified small business payroll tax credit for increasing  
research activities can only be used against the  
employer’s share of social security tax reported on Form  
941, 943, or 944. The amount on line 10 is the total  
amount of social security tax (both the employer and  
employee share), so you must multiply line 10 by 50% to  
limit the credit to the employer’s share of social security  
tax.  
Line 11 (before adjustment for third-party sick pay)  
– Amount of employer's share of social security tax (on wages paid to  
clients’ employees) included on Form 941, line 5a, column 2  
= Final amount to enter on line 11  
Example. You entered $12,400 on Form 8974, line 8,  
and zero on line 9. Line 10 was also $12,400. 50% of  
line 10 is $6,200. However, this amount must be adjusted  
because the amount from Form 941, line 5a, column 2,  
that was entered on line 8 included the employer’s share  
of social security tax that you paid for the wages paid to  
your client’s employees. There isn’t a line on Form 941  
that can assist in this calculation but you must still  
determine the amount of Form 941, line 5a, column 2, that  
was for wages paid to your client’s employees. For  
purposes of this example, if you determine that $5,000 of  
the employer’s social security tax included on Form 941,  
line 5a, column 2, was attributable to your client’s  
employees, you must subtract $5,000 from $6,200 (50%  
of the amount reported on line 10) and enter $1,200 on  
line 11.  
If you file Form 943 or 944, don't multiply line 10  
!
CAUTION  
of Form 943 or 944, later. If you’re a third-party  
payer of sick pay or you received a Section 3121(q) Notice  
and Demand, check the applicable box on line 11 and see  
the instructions next.  
Third-Party Payers of Sick Pay  
If you’re a third-party payer of sick pay that files  
Form 944, you can follow the directions below by  
substituting references to Form 941, line 8, with  
TIP  
Form 944, line 6; and Form 941, line 5a, column 2, with  
Form 944, line 4a, column 2.  
Section 3121(q) Notice and Demand  
You can only take up to $250,000 of the qualified small  
business payroll tax credit for increasing research  
activities against the employer’s share of social security  
tax on wages paid to your employees each quarter.  
Because the amount entered on Form 8974, line 8,  
included social security tax for your clients’ employees,  
you must make an adjustment to the amount reported on  
Form 8974, line 11.  
Adjustment if you transferred liability. If you  
transferred the liability for the employer’s share of social  
security tax to the employer (client), you must reduce the  
amount reported on Form 8974, line 11, by the amount of  
social security tax included on Form 941, line 8. Don’t just  
subtract the amount reported on Form 941, line 8,  
because that line includes both social security tax and  
Medicare tax.  
If you received a Section 3121(q) Notice and Demand for  
tax due on unreported tips (Letter 3263 or Letter 4520)  
during the quarter, you report the amount for the  
employer’s share of social security tax and Medicare tax  
on Form 941, line 5f. Letter 3263 or Letter 4520 includes  
an attachment that shows the employer’s share of social  
security tax. You must add the employer’s share of social  
security tax to the amount reported on Form 8974, line 11.  
-4-  
Instructions for Form 8974 (Rev. 12-2023)  
   
here on your Form 8974 for that subsequent year because  
this portion of the credit can be applied against the  
employer social security tax paid in all four quarters of that  
subsequent year. The instructions next explain the  
adjustment in two situations: (1) you're claiming the credit,  
but you don’t have a credit carryforward from a prior year;  
and (2) you’re claiming the credit in a subsequent year  
based on an election in that subsequent year with a credit  
carryforward from a prior year.  
Line 11 (before considering a Section 3121(q) Notice and  
Demand)  
+ Employer’s share of social security tax from Letter 3263 or  
Letter 4520  
= Final amount to enter on line 11  
Example. You entered $12,400 on Form 8974, line 8,  
and $6,200 on line 9. Line 10 was $18,600. 50% of line 10  
is $9,300, but you also reported an amount on Form 941,  
line 5f, because you received Letter 3263. Letter 3263  
showed unreported tips of $20,000 and tax due of $1,530.  
The attachment to Letter 3263 listed your liability for tax on  
unreported tips as follows.  
First year claiming the credit or subsequent year  
claiming the credit but without a credit carryforward  
from a prior year.  
Steps to determine the amount to report on Form  
8974, line 11.  
Employer’s share of social security tax: $1,240  
Employer’s share of Medicare tax: $290  
1. Determine the amount of social security tax  
reported on Form 8974, line 10, attributable to each  
quarter of the year that is reported in the calendar year  
box at the top of Form 8974 and enter these amounts in  
the table below in column (b). Multiply each quarter’s  
social security tax by 50% (0.50) and enter the amounts in  
column (c).  
You must add $1,240 (employer’s share of social security  
tax from Letter 3263) to $9,300 (50% of the amount  
reported on line 10) and enter $10,540 on line 11.  
Line 11 Adjustment for Filers of Form 943 or 944  
Employers who report their payroll taxes on an annual  
basis (Forms 943 and 944) may need to adjust the  
amount reported on Form 8974, line 11, because the  
qualified small business payroll tax credit for increasing  
research activities can’t be claimed until the first calendar  
quarter that begins after the date on which you file your  
income tax return that makes the election to take the credit  
against payroll taxes. The amount reported on Form 8974,  
line 10, is the total amount of social security tax (both  
employer and employee share) for the whole year, but you  
can only apply this portion of the credit against the  
employer share of social security tax paid in calendar  
quarters that began after the date on which you filed your  
income tax return making the election. You can’t apply the  
credit against the employer share of social security tax  
paid in any calendar quarter that began before the date on  
which you filed your income tax return making the  
election. You may therefore need to adjust the amount you  
report on Form 8974, line 11, to be 50% of the total social  
security tax that you paid in the quarters after the income  
tax return making the election was filed. However, as  
discussed later, the credit or any previous credit carried  
forward is first taken against the employer share of social  
security tax up to $250,000 per quarter, then any  
(d) Amount  
(c) Multiply  
from column  
(b) Social  
security tax  
(a) Quarter  
column (b) by (c) to include  
50% (0.50)  
on Form 8974,  
line 11  
First (Jan. 1–  
Mar. 31)  
Second (Apr. 1–  
June 30)  
Third (July 1–  
Sept. 30)  
Fourth (Oct. 1–  
Dec. 31)  
Total  
2. Determine when the election was made (that is, the  
date that you filed your income tax return as reported on  
Form 8974, Part 1, column (c)).  
3. Enter in column (d) the amounts from column (c) for  
the quarters that began after the date determined above in  
Step 2. Add the amounts in column (d), and enter the total  
on Form 8974, line 11.  
remaining elected credit or any previous credit carried  
forward is taken against the employer share of Medicare  
tax, and then any unused credit is available to be carried  
forward to the next quarter.  
Form 943 example (first year claiming the credit).  
You filed your 2023 income tax return based on a calendar  
year (January 1–December 31) on April 15, 2024. You  
elected to take a $100,000 payroll tax credit for increasing  
research activities on the Form 6765 that you filed with  
your 2023 income tax return. You’ll claim the payroll tax  
credit on your 2024 Form 943 that you file in January  
2025. In January 2025, you prepare your 2024 Form 943  
and Form 8974 to take the payroll credit. The amount you  
figured on Form 8974, line 10, for total social security tax  
paid in 2024 is $80,000. Following Step 1 above, you  
determine the following social security tax breakdown by  
quarter.  
When filing Form 943 or Form 944 and claiming the  
payroll tax credit, you’ll need to adjust the amount you  
report on line 11 if it is the first year claiming the credit, or  
a subsequent year claiming the credit and the income tax  
return electing the credit was filed on any date in the first 3  
quarters of the calendar year (that is, January 1–  
September 30). In contrast, if you made the election on an  
income tax return filed in the fourth quarter of the year  
(October 1–December 31), you can't claim the credit until  
the first quarter of the subsequent year on your  
employment tax return for that subsequent year, and you  
won’t need to make the adjustment for line 11 described  
Instructions for Form 8974 (Rev. 12-2023)  
-5-  
 
(d) Amount  
(d) Amount  
(c) Multiply  
from column  
(c) Multiply  
from column  
(b) Social  
security tax  
(b) Social  
security tax  
(a) Quarter  
column (b) by (c) to include  
(a) Quarter  
column (b) by (c) to include  
50% (0.50)  
on Form 8974,  
line 11  
50% (0.50)  
on Form 8974,  
line 11  
First (Jan. 1–  
Mar. 31)  
$12,000  
$6,000  
First (Jan. 1–  
Mar. 31)  
Second (Apr. 1– $18,000  
June 30)  
$9,000  
Second (Apr. 1–  
June 30)  
Third (July 1–  
Sept. 30)  
$25,000  
$12,500  
$12,500  
$40,000  
$12,500  
$12,500  
$25,000  
Third (July 1–  
Sept. 30)  
Fourth (Oct. 1– $25,000  
Dec. 31)  
Fourth (Oct. 1–  
Dec. 31)  
Total  
$80,000  
Total  
For purposes of Step 2, your income tax return was  
filed on April 15, 2024. In Step 3, you enter in column (d)  
the amounts from column (c) for the quarters that began  
after April 15: $12,500 for the third quarter and $12,500 for  
the fourth quarter. You add the amounts in column (d) and  
you enter the total, $25,000, on Form 8974, line 11. In this  
example, you'll also have $75,000 of credit remaining that  
will be used against the employer share of Medicare tax  
applicable to the third and fourth quarters. Any remaining  
credit, after reducing the employer share of social security  
tax and the employer share of Medicare tax, is then  
carried forward to your 2025 Form 943.  
Subsequent year claiming the credit with a credit  
carryforward from a prior year. Determine if you’re  
carrying forward any remaining credit from a prior year. If  
this is the first year that you’re claiming the credit, you  
don’t have any carryforward. If this isn’t the first year that  
you’re claiming the credit, the amount of carryforward  
remaining is reported on Form 8974, Part 1, column (g), of  
your current Form 8974. However, don’t count any amount  
from a new election as a carryforward from a prior year.  
The amount carried forward from the prior calendar year is  
available to use against the employer share of social  
security tax paid in the first calendar quarter of the current  
year and subsequent quarters, because the first calendar  
quarter began after the date on which you filed your  
income tax return for the prior year. However, the amounts  
claimed in the current calendar year for an election made  
on an income tax return filed in the current year may only  
be used against the employer share of social security tax  
paid in calendar quarters that began after the date on  
which you filed your income tax return as explained earlier.  
2. Add the amounts in column (c) until you reach the  
amount of the credit carried forward from the prior year  
and enter these amounts in column (d). For this step, don’t  
include in column (d) more than the amount of the credit  
that you carried forward.  
3. For the credit claimed in the current year, determine  
when the election was made (that is, the date that you  
filed your income tax return as reported on Form 8974,  
Part 1, column (c)).  
4. For the quarters that began after the date  
determined above in Step 3, enter in column (d) any  
amounts in column (c) not previously used. Add the  
amounts in column (d), and enter the total on Form 8974,  
line 11. If the amounts you figured in Step 2 carry forward  
into the same quarter as the amounts you figure in Step 4,  
you should include both amounts in that quarter’s total in  
column (d).  
Form 943 example (subsequent year claiming the  
credit with a credit carryforward from a prior year).  
Continuing with the previous example, you use $20,000 of  
$75,000 credit remaining against the employer share of  
Medicare tax applicable to the third and fourth quarters of  
2024. The remaining $55,000 credit, after reducing the  
employer share of social security tax and the employer  
share of Medicare tax, is carried forward to your 2025  
Form 943. You filed your 2024 income tax return based on  
a calendar year (January 1–December 31) on April 15,  
2025. You elected to take a $200,000 payroll tax credit for  
increasing research activities on the Form 6765 that you  
filed with your 2024 income tax return. You’ll claim the  
payroll tax credit on your 2025 Form 943 that you file in  
January 2026. In January 2026, you prepare your 2025  
Form 943 and Form 8974 to take the payroll credit. The  
amount on Form 8974, line 7, is $255,000 ($55,000  
carried forward from 2024, and $200,000 for 2025). The  
amount you figured on Form 8974, line 10, for total social  
security tax paid in 2025 is $400,000.  
Steps to determine the amount to report on Form  
8974, line 11.  
1. Determine the amount of social security tax  
reported on Form 8974, line 10, attributable to each  
quarter of the year that is reported in the calendar year  
box at the top of Form 8974 and enter these amounts in  
the table below in column (b). Multiply each quarter’s  
social security tax by 50% (0.50) and enter the amounts in  
column (c).  
Following Step 1 above, you determine the following  
breakdown by quarter and enter the amounts in columns  
(b) and (c).  
-6-  
Instructions for Form 8974 (Rev. 12-2023)  
increasing research activities. Also, you can’t enter the  
amount from Form 941, line 5c, column 2; or Form 943,  
line 5, on line 14 of any of the Forms 8974 that are  
attached to the aggregate Form 941 or 943. This portion  
of the credit is based on each employer’s liability for  
Medicare tax. Therefore, you must enter on line 14 of each  
client’s Form 8974 the amount that the client would’ve  
reported on Form 941, line 5c, column 2; or Form 943,  
line 5, if the client filed its own Form 941 or 943. See  
additional adjustments you may need to make if you file  
Form 943.  
(d) Amount  
(c) Multiply  
from column  
(b) Social  
(a) Quarter  
column (b) by (c) to include  
security tax  
50% (0.50)  
$40,000  
$45,000  
$50,000  
$65,000  
$200,000  
on Form 8974,  
line 11  
First (Jan. 1–  
Mar. 31)  
$80,000  
$40,000  
$15,000  
$50,000  
$65,000  
$170,000  
Second (Apr. 1– $90,000  
June 30)  
Third (July 1–  
Sept. 30)  
$100,000  
Fourth (Oct. 1– $130,000  
Dec. 31)  
Line 15  
Total  
$400,000  
Multiply line 14 by 50% (0.50). The amount of qualified  
small business payroll tax credit for increasing research  
activities that can be used against the employer's share of  
Medicare tax is limited to the amount of the employer's  
share of Medicare tax reported on Form 941, 943, or 944.  
The amount on line 14 is the total amount of Medicare tax  
(both the employer and employee share), so you must  
multiply line 14 by 50% to limit the credit to the employer’s  
share of Medicare tax.  
Following Step 2, you add the amounts in column (c)  
until you reach the amount of the credit carried forward  
from the prior year ($55,000 ($40,000 and $15,000)) and  
you enter these amounts in column (d). Your carryforward  
credit of $55,000 is now completely used up. For  
purposes of Step 3, your income tax return was filed on  
April 15, 2025. In Step 4, for the quarters that began after  
the date determined earlier in Step 3 (third and fourth  
quarters), enter in column (d) any amounts in column (c)  
not previously used ($50,000 and $65,000). You add the  
amounts in column (d) and you enter the total, $170,000,  
on Form 8974, line 11. Your total payroll tax credit for 2025  
is $170,000 ($55,000 carried forward from your 2024  
Form 8974 and $115,000 from your 2025 Form 8974). In  
this example, you'll also have $85,000 of credit remaining  
that will be used against the employer share of Medicare  
tax applicable to the third and fourth quarters. Any  
remaining credit, after reducing the employer share of  
social security tax and the employer share of Medicare  
tax, is then carried forward to your 2026 Form 943.  
If you file Form 943 or 944, don't multiply line 14  
!
CAUTION  
of Form 943 or 944, later. If you’re a third-party  
payer of sick pay or you received a Section 3121(q) Notice  
and Demand, check the applicable box on line 11 and see  
the instructions next.  
Third-Party Payers of Sick Pay  
If you’re a third-party payer of sick pay that files  
Form 944, you can follow the directions below by  
substituting references to Form 941, line 8, with  
TIP  
Form 944, line 6; and Form 941, line 5c, column 2, with  
Form 944, line 4c, column 2.  
Line 12  
This portion of the qualified small business payroll tax  
credit for increasing research activities is used against the  
employer’s share of Medicare tax on wages paid to your  
employees. Because the amount entered on Form 8974,  
line 14, included Medicare tax for your clients’ employees,  
you must make an adjustment to the amount reported on  
Form 8974, line 15.  
Adjustment if you transferred liability. If you  
transferred the liability for the employer's share of  
Medicare tax to the employer (client), you must reduce the  
amount reported on Form 8974, line 15, by the amount of  
Medicare tax included on Form 941, line 8. Don't just  
subtract the amount reported on Form 941, line 8,  
because that line includes both social security tax and  
Medicare tax.  
Enter the smaller of line 7 or 11, but not more than  
$250,000 per quarter (Form 943 or 944 not more than $1  
million per year). If you entered the amount from line 7,  
stop here and also enter this amount on Form 941,  
line 11a; Form 943, line 12a; or Form 944, line 8a. This is  
the total credit against the employer share of social  
security tax. If line 12 is less than line 7, see the  
instructions for lines 13–17. Any remaining elected credit  
or any previous credit carried forward is taken against the  
employer share of Medicare tax, and then any unused  
credit is carried forward to the next quarter (Form 941) or  
year (Form 943 or 944).  
Line 13  
Subtract line 12 from line 7. Enter the result on line 13.  
Line 15 (before considering Form 941, line 8)  
− Amount of Medicare tax included on Form 941, line 8  
Line 14  
Enter the amount from Form 941, line 5c, column 2; Form  
943, line 5; or Form 944, line 4c, column 2. This is the total  
amount of Medicare tax on wages.  
= Final amount to enter on line 15  
If you’re filing an aggregate Form 941 or 943, you  
Example. You entered $2,900 on Form 8974, line 14.  
50% of line 14 is $1,450. However, this amount must be  
adjusted because you reported $6,120 ($4,960 of social  
must file a Form 8974 for each client that is taking  
!
CAUTION  
the qualified small business payroll tax credit for  
Instructions for Form 8974 (Rev. 12-2023)  
-7-  
 
security tax and $1,160 of Medicare tax) on Form 941,  
line 8. You must subtract $1,160 (amount of Medicare tax  
reported on Form 941, line 8) from $1,450 (50% of the  
amount reported on line 14) and enter $290 on line 15.  
Adjustment if you didn’t transfer liability. If you didn't  
transfer the liability for the employer's share of Medicare  
tax to the employer (client) and you paid the employer  
Medicare tax on the third-party sick pay that you paid on  
behalf of the client, you must reduce the amount reported  
on line 15 by any employer Medicare tax (included on  
Form 941, line 5c, column 2) that was for the employees of  
the client.  
You must add $290 (employer’s share of Medicare tax  
from Letter 3263) to $2,175 (50% of the amount reported  
on line 14) and enter $2,465 on line 15.  
Line 15 Adjustment for Filers of Form 943 or 944  
If you had credit remaining after reducing the employer  
share of social security tax, that remaining credit goes  
against the employer share of Medicare tax. Employers  
who report their payroll taxes on an annual basis (Forms  
943 and 944) may need to adjust the amount reported on  
Form 8974, line 15, because the qualified small business  
payroll tax credit for increasing research activities can't be  
claimed until the first calendar quarter that begins after the  
date on which you file your income tax return that makes  
the election to take the credit against payroll taxes. The  
amount reported on Form 8974, line 14, is the total  
amount of Medicare tax (both employer and employee  
share) for the whole year, but you can only apply this  
portion of the credit against the employer share of  
Line 15 (before adjustment for third-party sick pay)  
– Amount of employer’s share of Medicare tax (on wages paid to  
clients’ employees) included on Form 941, line 5c, column 2  
= Final amount to enter on line 15  
Medicare tax paid in calendar quarters that began after  
the date on which you filed your income tax return making  
the election. You can't apply the credit against the  
Example. You entered $2,900 on Form 8974, line 14.  
50% of line 14 is $1,450. However, this amount must be  
adjusted because the amount from Form 941, line 5c,  
column 2, that was entered on line 14 included the  
employer’s share of Medicare tax that you paid for the  
wages paid to your client’s employees. There isn’t a line  
on Form 941 that can assist in this calculation but you  
must still determine the amount of Form 941, line 5c,  
column 2, that was for wages paid to your client’s  
employees. For purposes of this example, if you determine  
that $1,150 of the employer’s Medicare tax included on  
Form 941, line 5c, column 2, was attributable to your  
client’s employees, you must subtract $1,150 from $1,450  
(50% of the amount reported on line 14) and enter $300  
on line 15.  
employer share of Medicare tax paid in any calendar  
quarter that began before the date on which you filed your  
income tax return making the election. You may therefore  
need to adjust the amount you report on Form 8974,  
line 15, to be 50% of the total Medicare tax that you paid  
in the quarters after the income tax return making the  
election was filed. To make this adjustment, you can use  
the tables in the instructions for line 11 by substituting  
column (b) with Medicare tax and substituting references  
to Form 8974, line 10, with Form 8974, line 14, and  
references to Form 8974, line 11, with Form 8974, line 15.  
Line 16  
Enter the smaller of line 13 or 15. This is the total credit  
against the employer share of Medicare tax.  
Section 3121(q) Notice and Demand  
If you received a Section 3121(q) Notice and Demand for  
tax due on unreported tips (Letter 3263 or Letter 4520)  
during the quarter, you report the amount for the  
employer’s share of social security tax and Medicare tax  
on Form 941, line 5f. Letter 3263 or Letter 4520 includes  
an attachment that shows the employer’s share of  
Medicare tax. You must add the employer’s share of  
Medicare tax to the amount reported on Form 8974,  
line 15.  
Line 17  
Add lines 12 and 16. Also, enter this amount on Form 941,  
line 11a; Form 943, line 12a; or Form 944, line 8a. This is  
the total qualified small business payroll tax credit for  
increasing research activities.  
Paperwork Reduction Act Notice. We ask for the  
information on Form 8974 to carry out the Internal  
Revenue laws of the United States. You’re required to give  
us the information. We need it to ensure that you’re  
complying with these laws and to allow us to figure and  
collect the right amount of tax.  
Line 15 (before considering a Section 3121(q) Notice and  
Demand)  
+ Employer’s share of Medicare tax from Letter 3263 or Letter  
4520  
= Final amount to enter on line 15  
You’re not required to provide the information requested  
on a form that is subject to the Paperwork Reduction Act  
unless the form displays a valid OMB control number.  
Books or records relating to a form or its instructions must  
be retained as long as their contents may become  
material in the administration of any Internal Revenue law.  
Generally, tax returns and return information are  
Example. You entered $4,350 on Form 8974, line 14.  
50% of line 14 is $2,175, but you also reported an amount  
on Form 941, line 5f, because you received Letter 3263.  
Letter 3263 showed unreported tips of $20,000 and tax  
due of $1,530. The attachment to Letter 3263 listed your  
liability for tax on unreported tips as follows.  
confidential, as required by Code section 6103.  
The time needed to complete and file Form 8974 will  
vary depending on individual circumstances. The  
estimated average time is:  
Employer’s share of social security tax: $1,240  
Employer’s share of Medicare tax: $290  
-8-  
Instructions for Form 8974 (Rev. 12-2023)  
 
can send us comments from IRS.gov/FormComments. Or  
you can write to the Internal Revenue Service, Tax Forms  
and Publications Division, 1111 Constitution Ave. NW,  
IR-6526, Washington, DC 20224. Don't send Form 8974  
to this address. Instead, see Where Should You File? in  
the Instructions for Form 941 or the Instructions for Form  
944; or see Where To File in the Instructions for Form 943.  
Recordkeeping .  
Learning about the law or the form.  
Preparing and sending the form to the IRS  
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45 min.  
1 hr.  
1 hr.  
If you have comments concerning the accuracy of  
these time estimates or suggestions for making Form  
8974 simpler, we would be happy to hear from you. You  
Instructions for Form 8974 (Rev. 12-2023)  
-9-