How to File Your Form 8974 and Form 941 with QuickBooks

Summary:

• The IRS requires that you file Form 8974 the quarter after you file your income tax return with Form 6765 attached.
• If you miss the filing deadline, you will need to amend that quarter’s payroll tax return.
• Quickbooks does not support automatic filing of the R&D tax credit, so you will need to turn off automatic filing and submit your forms manually.
• These forms need to be submitted quarterly until the credit is fully exhausted.
• If you’re filing to claim the R&D payroll tax credit for the previous tax year, the earliest you can process your credit is one quarter after you file your federal income tax return and Form 6765. The deadline to file for any given quarter is 30 days after the end of the quarter. For example, if you’re filing to claim the payroll tax credit for 2021, and you intend on filing your Federal Tax Return in Q1 2022, then the earliest you can process your credit is Q2 2022. To do so, you must file your Form 8974 and Form 941 by 30 days after the end of Q2 2022.
• Some of the information below is sourced from QuickBooks and may not reflect Quickbooks’s latest changes.

Steps:

• Sign into your Quickbooks account → Select the Settings icon, then select Payroll Settings → In the Taxes and forms section, clear the Automate Taxes and forms checkbox → Select Save. When you turn off automated taxes, Quickbooks reminds you when your tax payments and form filings are due. You will find reminders in your payroll to do list.
• Download Form 941 for the quarter you’re eligible to start claiming the credit. This is the quarter after you filed your return that included Form 6765. For example, if your income tax returns were filed in Q1 2022, then you can claim the credit against payroll taxes on Form 941 for Q2 2022.
• To find your Form 941: Sign into Quickbooks → Go to “Taxes” → Click “Payroll Tax” → Select “Quarterly Forms” → Choose the 941 Form → Click the period from the drop-down and then click “View”.
• Update your Form 941 to include the amount of payroll tax credit you would like to use to offset your quarterly payroll taxes. You will need to update Form 941, Part 1, Line 11a with the amount of the credit you have indicated on Form 8974, Part 2, Line 12. Below you will find steps for how to complete form 8974.
• When you are ready to pay and file your payroll taxes, you can follow the Quickbooks instruction guide on how to pay and file payroll taxes and forms in Online Payroll.
• You will need to file Form 8974 with Form 941 to the IRS every quarter until your credit is exhausted.

How to complete Form 8974:

Neo.tax will help you to create the Header and Part 1 of Form 8974. You will need to complete Part 2 of Form 8974 using Form 941 provided by Quickbooks.

Steps:

• Use Neo.tax to complete Part 1 of Form 8974.
• Line 7: Enter the amount from Part 1, line 6, column (g).
• Line 8: Enter the amount from Form 941, line 5a, column 2.
• Line 9: Enter the amount from Form 941, line 5b, column 2.
• Line 10: Add lines 8 and 9. Enter the result on line 10.
• Line 11: Multiply line 10 by 50% (0.50).
• Line 12: Enter the smaller of line 7 or line 11. Make sure to enter this amount on Form 941, line 11. If line 12 is less than line 7, the remaining amount can be used on a Form 8974 for the next quarter.
• When you are ready to pay and file your payroll taxes, you can follow the Quickbooks instruction guide on how to pay and file payroll taxes and forms in Online Payroll.
• You will need to file Form 8974 with Form 941 to the IRS every quarter until your credit is exhausted.