New R&D Credit Rules

New rules have been put in place for claiming refunds on research tax credits, requiring more information than those previously established. For each business component, companies will need to identify all research activities they’ve performed and report all individuals performing each research activity, as well as identify what information each individual was aiming to find. In addition to all of this, refund credits will also require companies to disclose the total qualified employee wage expenses, total qualified supply expenses, and total qualified research expenses for the claim year using form 6765.

Seeing as there is not a lot of time to prep for this change as the effective date is set as January 10th, 2022; and much more detailed information is required, there are likely to be a lot of issues with this update. Additionally, small and midsize companies may not have the resources to put this information together, so why change if there are bound to be problems? The changes come as the IRS is looking to combat R&D credit tax scams, which made its “Dirty Dozen” list.

IRS Inflation Adjustments

Previously, there were only predictions as to what the IRS’ inflation-adjusted tax brackets might be, however, they were officially released recently. These adjustments are much higher than usual due to the crazy year we’ve had, so let’s take a look:

Marginal Rates:
  • 37% Tax Rate
    • Individual or Married Filing Separately – $539,900
    • Married Couples Filing Jointly – $647,850
  • 35% Tax Rate
    • Individual or Married Filing Separately – $215,950
    • Married Couples Filing Jointly – $431,900
  • 32% Tax Rate
    • Individual or Married Filing Separately – $170,050
    • Married Couples Filing Jointly – $340,100
  • 24% Tax Rate
    • Individual or Married Filing Separately – $89,075
    • Married Couples Filing Jointly – $178,150
  • 22% Tax Rate
    • Individual or Married Filing Separately – $41,775
    • Married Couples Filing Jointly – $83,550
  • 12% Tax Rate
    • Individual or Married Filing Separately – $10,275
    • Married Couples Filing Jointly – $20,550
Deductions:
  • Married Couples Filing Jointly
    • $25,900 – Up $800 from last year
  • Single or Married Taxpayers Filing Separately
    • $12,950 – up $400 from last year
  • Head of Household
    • $19,400 – up $600 from last year

Signing Ceremony

This afternoon, President Joe Biden will be hosting a signing ceremony as he puts his infrastructure package into law. The ceremony will act in part as an event seeking to give Biden some momentum in America. This ceremony, however, will not be attended by all members of the GOP party will not be in attendance, most famously Mitch McConnell, who said in an interview, “No, I’ve got other things I’ve got to do other than going to a signing ceremony.” Follow along in our newsletter where we will be outlining the individual, business, international, and other tax changes to come from the passage of this bill!

Thoughts? Give us a call at 516-541-6549, and don’t forget—have a great week!

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