Payroll Tax Credit Strategies

Many of our clients claim their R&D tax credit and then go on to apply these credits against future payroll taxes. This is a dollar for dollar offset of a Qualified Small Business’ (QSB) OASDI liability (reported quarterly on Form 941). Note that any amount claimed as a credit against your payroll tax is not allowable as a payroll tax deduction.  Only QSBs can elect the payroll tax credit. According to the IRS, your business is considered a QSB if it has the following characteristics: QSBs that intend to elect the payroll tax credit should know of a few limitations: