Form 6765: Credit for Increasing Research Activities

Form 6765 is used to calculate certain tax credits related to qualifying research activities and expenses.

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Introduction

Form 6765, Credit for Increasing Research Activities, is a federal tax form used by eligible taxpayers to calculate certain credits related to qualifying research activities. The form may apply to businesses and other taxpayers that incur eligible research expenses and meet applicable requirements.

This guide provides general information about Form 6765, including who may use the form, the information commonly needed, and the basic process for completing it. The information is intended to provide a simple overview of Form 6765 and its general purpose.

What Is Form 6765?

Form 6765 is used to calculate a credit related to qualifying research activities and expenses. The form generally requires taxpayers to identify eligible research activities, determine applicable expenses, and calculate the available credit.

Form 6765 commonly involves:

Qualifying research activities
Qualified research expenses
Employee wages
Supplies
Contract research
Research payments
Credit calculations
Supporting business records

The information reported on Form 6765 should generally be based on the taxpayer’s payroll records, accounting records, research documentation, and other applicable business records.

Who Uses Form 6765?

Form 6765 may generally be used by businesses and other eligible taxpayers that conduct qualifying research activities and incur applicable research expenses. This may include corporations, partnerships, sole proprietorships, and other eligible businesses.

Not every research activity or business expense qualifies for the credit. Eligibility generally depends on the nature of the research, the activities performed, the expenses incurred, and other applicable requirements.

What Information Is Needed?

The information needed to complete Form 6765 generally comes from payroll records, accounting records, project records, research documentation, invoices, and other business records. Taxpayers should identify qualifying research activities and the expenses associated with those activities.

Common information includes:

Taxpayer name
Employer identification number or other identifying information
Description of research activities
Employee wage information
Supply costs
Contract research costs
Other qualifying research expenses
Applicable research documentation
Credit calculation information
Supporting business records

The specific information required may depend on the taxpayer’s business activities, research expenses, and method used to calculate the credit.

How to Fill Out/Complete Form 6765

Form 6765 is generally completed by identifying qualifying research activities and determining the applicable research expenses associated with those activities. The taxpayer then uses the applicable information to calculate the research credit.

The basic process is to gather research, payroll, accounting, and project records, identify qualifying activities, determine applicable expenses, complete the credit calculation, and review the completed form before submitting it with the applicable tax return. Taxpayers should retain documentation supporting the research activities and expenses.

Section 1

Enter the taxpayer’s identifying information and applicable tax information. This generally includes the taxpayer’s name, identifying information, and other information needed to associate Form 6765 with the applicable tax return.

The information should be reviewed carefully to make sure it is accurate and consistent with the taxpayer’s tax and business records.

Section 2

Identify the qualifying research activities performed by the taxpayer. This generally involves reviewing the business’s research, development, testing, experimentation, or other applicable activities.

Taxpayers should maintain documentation describing the nature of the research activities, the work performed, and the connection between the activities and the expenses being reported.

Section 3

Determine applicable employee wage expenses associated with qualifying research activities. These amounts generally come from payroll records and other records showing the employees involved in the applicable research activities.

Taxpayers should review payroll and employee records carefully to help ensure that the amounts reported are accurate and properly supported.

Section 4

Determine applicable supply expenses associated with qualifying research activities. This may include certain materials, supplies, and other applicable costs used in conducting qualifying research.

Taxpayers should compare the amounts with invoices, accounting records, and project documentation. Only applicable expenses should generally be included in the calculation.

Section 5

Determine applicable contract research expenses or other qualifying research costs. These amounts generally come from contracts, invoices, payment records, and other supporting business documentation.

Taxpayers should review agreements and payment records to help ensure that the reported amounts relate to qualifying research activities.

Section 6

Complete the applicable research credit calculation. This generally involves using qualifying research expenses and other applicable information to determine the amount of credit available to the taxpayer.

Taxpayers should review the calculation carefully and make sure the amounts used are supported by payroll, accounting, research, and business records.

Section 7

Complete any applicable alternative calculation or other credit calculation required by Form 6765. The appropriate calculation may depend on the taxpayer’s circumstances and the information available for the research activities and expenses.

Taxpayers should use the calculation that applies to their circumstances and retain records supporting the amounts and methodology used.

Section 8

Enter any additional applicable information required by Form 6765. Only information that applies to the taxpayer’s research activities, expenses, and credit calculation should generally be included.

Taxpayers should maintain supporting documentation for any additional amounts or information reported on the form.

Section 9

Determine the final research credit amount to be reported with the taxpayer’s applicable tax return. The final amount should generally reflect the qualifying research activities, applicable expenses, and completed credit calculations.

Taxpayers should compare the final amount with their supporting research, payroll, accounting, and tax records before submitting the return.

Section 10

Review the completed Form 6765 and make sure all applicable information has been entered. Check the taxpayer information, research activities, employee wages, supplies, contract research, other qualifying expenses, calculations, and final credit amount.

The completed form should generally be included with the applicable tax filing when required. Taxpayers should also keep a copy of Form 6765 and supporting research, payroll, accounting, and tax records for their records.

Final Review

Review Form 6765 after completing all applicable sections. Check the taxpayer information, qualifying research activities, employee wages, supplies, contract research, other research expenses, credit calculations, supporting records, and final credit amount.

A final review can help identify calculation or reporting errors before the form is submitted. Taxpayers should retain Form 6765 and supporting research, payroll, accounting, and tax records with their tax records.

Common Mistakes

Common Form 6765 mistakes may include claiming activities that do not qualify, including expenses that are not eligible, or failing to properly document the research activities being reported. Errors in employee wage, supply, or contract research amounts can also affect the credit calculation.

Other mistakes may include entering information in the wrong section, using unsupported expense amounts, overlooking applicable requirements, leaving required information incomplete, or submitting the form without reviewing it. Comparing Form 6765 with research, payroll, accounting, and tax records before filing can help identify potential errors.

Related IRS Forms

Taxpayers may encounter other federal tax forms when reporting business income, expenses, research activities, and tax credits. Different forms are used to calculate specific credits, report general business credits, and prepare federal tax returns.

Common related forms include:

Form 3800 for the general business credit
Form 3468 for certain investment credits
Form 1120 for certain corporate income tax reporting
Form 1065 for partnership tax reporting
Form 1120-S for certain S corporation tax reporting
Form 1040 for individual federal income tax reporting

The appropriate form depends on the taxpayer’s specific circumstances and the type of business activity, credit, or tax information being reported.

Where to File or Submit

Form 6765 is generally submitted with the applicable federal tax return when required. The appropriate filing method depends on the taxpayer’s circumstances and the type of return being filed.

Taxpayers should review the applicable filing requirements before submitting Form 6765. A copy of the completed form and supporting research, payroll, accounting, and business records should generally be retained for the taxpayer’s records.

Current IRS Form & Instructions

Taxpayers should use the applicable version of Form 6765 and its instructions when preparing the form. Forms and requirements can change, so the version used should correspond with the reporting period and circumstances being reported.

Before submitting Form 6765, review the form and instructions carefully and confirm that the information agrees with the taxpayer’s research, payroll, accounting, business, and tax records. This can help identify errors before the form is submitted.

Important Information / Disclaimer

This Form 6765 guide is provided for general informational purposes only and is intended to provide a basic overview of Form 6765 and common information associated with calculating certain research-related tax credits. This information is not tax, legal, accounting, or financial advice, and research credit requirements can vary depending on the taxpayer’s circumstances, research activities, expenses, and applicable rules.

Taxpayers are responsible for determining their applicable filing, payment, recordkeeping, and reporting requirements, and information on this page may not cover every situation, exception, or special rule that may apply. When appropriate, taxpayers should consider seeking assistance from a qualified tax professional or other qualified advisor regarding their specific tax situation, qualifying research activities, research expenses, credit calculations, or Form 6765 filing requirements.