Final Form 6765 is Available for 2024 Federal R&D Tax Credits

At a glance

• The main takeaway: After years of review and debate, the final Form 6765 is available for taxpayers claiming the Federal Research and Development (R&D) Tax Crediton their 2024 returns.
• The impact on your business: The finalized form mandates new quantitative and qualitative information that increases the administration burden of documentation on taxpayers.
• Next steps: Aprio’s team of R&D Tax Credit specialists can evaluate your credit opportunities and assemble a robust documentation strategy. 

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The full story:

Over the course of several years, the IRS has compiled the results of numerous reviews and feedback from taxpayers and tax professionals into a revised Form 6765 for claiming the Federal Credit for Increasing Research Activities, also known as the R&D Tax Credit. The final version of Form 6765 and its instructions are now available for taxpayers claiming the R&D credit on their 2024 federal income tax returns.

Since the IRS proposed its initial changes to Form 6765 in September of 2023, it has indicated that the new form is intended to:

1. Make tax reporting more consistent,
2. Improve the information received for tax administration, and
3. Build an ongoing effort to manage resources in a more effective and efficient way. 

What’s new on Form 6765?

The most considerable changes in the final form include the introduction of two new sections: Section E, which includes five questions on “other information,” and Section G, which includes extensive questions specific to taxpayers’ business components used in the calculation of the credit. Section G will likely consume the most documentation and time to complete, given it requires taxpayers to provide detailed information about each business component they are claiming the research credit for. Aside from providing the financial information associated with each business component, this section will require taxpayers to provide other details, such as:

• Define the business component type, such as product, process, software, or other categories as specified in the form instructions,
• Indicate whether the business component involves software development, and
• Detail the “information sought to be discovered” through the research activities.

Unless you’re filing an amended return to claim the R&D tax credit (more on this below), the new Section G is optional for the 2024 tax year. However, the entirety of the new form will be mandatory for tax year 2025, with exceptions for certain businesses.

Exemption criteria and who qualifies

While all taxpayers will be required to use the new form for the 2024 tax year, some taxpayers will be exempt from completing portions of the form going forward. Taxpayers meeting the following criteria will be exempt from completing Section G:

• Qualified Small Businesses using the credit to reduce payroll taxes, and
• Taxpayers with total Qualified Research Expenditures (QREs) of $1.5 million or less, determined at the control group level, and gross receipts of $50 million or less.

Taxpayers that are not exempt from completing Section G will have the option to complete it for 2024 tax year filings before it becomes mandatory for the 2025 tax year. Other updates to Section G include the requirement to report a listing of business components, up to 50 total, that represent at least 80% of total QREs. Taxpayers following the ASC 730 directive will be exempt from individual business component reporting and may report all QREs calculated under that directive as a single line item.

Filing an amended R&D tax credit return?

Compared to filing the R&D tax credit on an original return, amended tax returns have stricter reporting and documentation requirements. While refund claims for these credits have historically required more documentation on research activities by business component, the criteria for amended returns have evolved significantly in recent years. Most recently, the IRS extended the transition period for claiming refund credits through January 10, 2026, as summarized in this article.

If you plan to file an amended return to claim your credit for the 2024 tax year, prepare and plan accordingly to complete Section G—specifically, column 49(f) where the “information sought to be discovered” must be described. The details of column 49(f) section should apply each component of the IRS’ four-part test to the research activities to demonstrate how they qualify for the credit.

Taxpayer impacts

Because the form has historically only required taxpayers to report quantitative data, the new reporting requirements have raised concerns, especially for small businesses with limited resources and taxpayers filing without professional guidance. Documentation for both federal and state incentives is more important now than ever.

The bottom line

Given the increased complexity and evolving requirements for claiming R&D tax credits, companies are encouraged to seek the counsel of knowledgeable tax professionals to appropriately document and support their credit claims. Aprio’s dedicated R&D Tax Credit team continuously monitors updates on the new R&D tax credit laws and can guide you through the new reporting standards.

Related Resources/Assets/Aprio.com articles/pages

• IRS Extends Transition Period for R&D Refund Claims
• MORE Updates to Form 6765 for Federal R&D Tax Credits
• The R&D Credit Tax Form is Getting a Major Update