Form 6765: Credit for Increasing Research Activities

Form 6765, officially titled "Credit for Increasing Research Activities," is an Internal Revenue Service (IRS) document used by businesses to claim a tax credit for qualified research and development (R&D) expenses. This credit incentivizes innovation and growth in the U.S. economy by rewarding companies that invest in creating new or improved products, processes, or software.

Who Should File Form 6765?

A. Businesses of all sizes: Startups, established companies, and even large corporations can potentially benefit from the R&D credit.

B. Partnerships and S corporations: These entities must file Form 6765 to claim the credit.

C. Other businesses: If your only source for the credit comes from a partnership, S corporation, estate, or trust, you might not need Form 6765. You can instead report it directly on Form 3800, General Business Credit.

What are Qualified R&D Activities?

The IRS defines qualified R&D activities as those that:

  • Relate to the development of new or improved products, processes, formulas, or software.
  • Technological uncertainty exists – there's a reasonable expectation that the outcome will be uncertain.
  • Experimentation is involved – the activity requires experimentation to achieve a desired result.
  • Technical in nature – involve engineering or other applied sciences.

Most Common Questions about Form 6765:

What qualifies as a research activity?

The IRS defines qualified research activities broadly. They include activities related to developing new knowledge, processes, experiences, or products. Examples include developing new software, testing prototypes, or improving existing products.

What expenses are eligible for the credit?

Wages paid to qualified employees working on R&D, supplies used in R&D, and certain costs of renting or leasing R&D equipment are generally considered eligible expenses.

Where can I find the latest information on Form 6765?

The IRS website provides the most up-to-date information on Form 6765, including the latest instructions and any recent legislative changes: