Form 6765 (Including Section G)

What the form is

Form 6765 calculates the credit. It brings together the qualified research expenses a business has incurred and works out the credit using one of the methods the rules allow. It also includes Section G, which asks for detail about the business components behind the claim. In plain terms, the form asks the business to say what it researched, who did the work and what it cost, and then does the arithmetic.

For many businesses the form is short compared with the work behind it. The hard part is not filling the boxes. It is having records that support each number, so that a reviewer can sign the form with confidence and an examiner, if one ever asks, can follow the trail.

Who files it

Businesses that claim the federal research credit, usually with their income tax return. A business that is a qualified small business may also use the credit against payroll tax through a separate election, which has its own form. Whether a particular business can claim the credit, and by which method, is for its CPA or enrolled agent to decide.

What the agent prepares

A draft of the form, with the figures tied to the costs and business components captured during the year, so your reviewer can check each line. The agent fills in what it can from the records, and marks lines where the records are thin or where a decision is needed. Each figure links back to the underlying cost record and evidence.

A worked example (illustrative)

The figures here are invented, and no credit rate is applied. A company has three research projects. For each, the agent has gathered a description, a list of the people involved, their time shares and the related costs. When the reviewer opens the draft of the form, each project appears as a business component with its description and costs. One project has no description beyond a ticket title, and the agent has marked it. The reviewer asks the technical lead for two sentences on the technical uncertainty and the experiments tried. Once the lead writes them, the component is complete, and the reviewer can move on to the next. The form is not final until every component supports itself.

Limits

The agent drafts the form but does not decide eligibility or choose the method for you. Rules and form requirements change, including the requirements for the detail on business components, so please check the official source and speak to your CPA or enrolled agent. Nothing here is tax advice, and nothing guarantees that a claim will be accepted. Forms are filed through an authorized IRS e-file provider or tax software, not by Cost Guru.

Sources

• IRS: About Form 6765 (opens in a new tab)

Questions your adviser is likely to ask

Expect a good adviser to ask what each project set out to achieve and why it was uncertain, who worked on it and for how long, how the time was recorded, what costs were incurred and how they were coded, and whether anything about the project changed during the year. They may ask whether similar work was claimed before and, if so, how it was described. Having answers ready, and written down, shortens the conversation and improves the claim.

Claims that span more than one year

Research projects often run across tax years. The same project may appear in several claims, with different costs each time. It helps to keep a continuous record per project, so that each year's claim can describe where the work stood and what happened during that year. The agent keeps evidence by project and date, which makes it easier to see a single year's activity within a longer story. How multi-year claims are handled in detail is a matter for your adviser.