Not profitable yet? A qualified small business can apply up to $500,000 of its R&D credit each year against employer payroll taxes, real cash now, not a credit you wait years to use. We handle the mechanics and coordinate it directly with your payroll provider.
Check Your EligibilityThe income tax credit only helps if you have income tax to offset, and early-stage companies often don’t, yet. The payroll offset (§41(h)) solves that. A qualified small business can monetize the credit immediately by reducing the employer share of payroll taxes, turning a paper credit into cash flow at a stage when cash flow matters most.
The cap was $250,000 when the offset began. The Inflation Reduction Act doubled it, effective for tax years beginning after 2022.
Total: up to $500,000 per year, for up to five years.
We confirm eligibility, including the gross-receipts and age tests and any aggregation, before anything is filed.
The election only becomes cash when Form 8974 is filed with your Form 941 and your deposits go down, and that step lives with your payroll provider, which is exactly where the benefit tends to get dropped. We don’t hand you a form and wish you luck. We prepare the election and Form 8974, coordinate directly with your provider or PEO, whether that’s Gusto, Rippling, ADP, Paychex, Justworks, or an in-house team, and confirm the credit is applied and reconciled each quarter.
A pre-revenue software company spends about $1.2M on qualified engineering wages in its third year. Its R&D credit works out to roughly:
Applied against employer payroll taxes across the following quarters, reducing cash outflow while the company is still pre-profit, and carried forward until fully used.
Beginning the first calendar quarter after you file the income tax return that makes the election. So the timing of your return filing drives when the cash benefit begins.
We coordinate with whichever provider is running your payroll each quarter and make sure Form 8974 follows the credit, so a provider change doesn’t interrupt the benefit.
Generally yes, though it takes closer coordination since the PEO files the aggregate payroll return. We work directly with the PEO to apply and reconcile your portion.
You elect how much of the credit goes to payroll; any remainder follows the normal income tax credit rules. We model the split that fits your situation.
No, a flat fee based on the work. The credit is yours to keep.
This page is general information, not tax or legal advice. Eligibility and amounts depend on the taxpayer’s facts and applicable law, and are determined through the appropriate R&D study. Novaric does not guarantee eligibility, credit amounts, or any IRS outcome.