The Inflation Reduction Act (IRA) can be expected to require a few tax form adjustments. It appears that the IRS may revise Forms 941, 6755, 8794 and possibly others. Employers use these forms to claim the qualified small-business payroll tax credit for boosting research activities, which increased under the IRA. Section 13902 of the IRA allows an additional payroll research tax credit of up to $250,000 against Medicare Hospital Insurance tax for taxable years starting in 2023, but the credit can’t exceed the tax imposed for any calendar quarter. One potential issue is that some small businesses may not have enough income tax liability to claim the credit. Contact us for more information.
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