Archive for April 17, 2024

How To Receive Your R&D Payroll Tax Credit

How To Receive Your R&D Payroll Tax Credit

The Research and Development payroll tax credit, also known as the R&D payroll tax credit is a tax incentive designed for qualified businesses to offset their payroll tax. It is designed for new companies that perform research and technology development activities to be able to apply up to $500,000 of research credit against payroll tax liability. These R&D credits can be carried forward for up to 20 years.

Which Businesses Qualify for the R&D Payroll Tax Credit?

In order to qualify for the tax credit, a business must meet each of the following criteria:

  • Have 5 years or less in revenue
  • Have less than $5 million in revenue in the current year
  • Have conducted qualifying research activities and expenditures
Documentation Needed to Claim the R&D Payroll Tax Credit

Documentation is extremely important to defending any R&D tax credit claims. This includes having a permitted purpose, technological uncertainty, the process of experimentation, and being technological in nature.

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IRS Form 8938 (Statement of Specified Foreign Financial Assets): Reporting Requirements Overview

IRS Form 8938: Reporting Requirements Overview

Living abroad brings its own set of adventures and challenges, especially when it comes to navigating U.S. tax obligations. If you’re an expat with a financial footprint across borders, you’ll need to familiarize yourself with IRS Form 8938, a key component of the Foreign Account Tax Compliance Act (FATCA).

WHAT IS FORM 8938?

Form 8938, titled “Statement of Specified Foreign Financial Assets” is a tax form required by the U.S. Internal Revenue Service (IRS) for taxpayers to report their specified foreign financial assets if the total value of those such foreign bank assets exceeds certain thresholds. It was introduced as part of the Foreign Account Tax Compliance Act (FATCA) to combat tax evasion and ensure U.S. persons are reporting their foreign income.

The form is filed along with the taxpayer’s annual income tax return, and the reporting thresholds vary depending on the taxpayer’s filing status and whether they live in the U.S. or abroad.

WHO NEEDS TO FILE IRS FORM 8938?

IRS Form 8938 must be filed by U.S. taxpayers (citizens, residents, and certain nonresidents) who have specified foreign financial assets exceeding certain thresholds. These thresholds depend on the taxpayer’s filing status and residency:

  • U.S. Residents:
    • Single or married filing separately: Assets over $50,000 on the last day of the tax year or over $75,000 at any time during the year.
    • Married filing jointly: Assets over $100,000 on the last day of the tax year or over $150,000 at any time during the year.
  • Non-U.S. Residents:
    • Single or married filing separately: Assets over $200,000 on the last day of the tax year or over $300,000 at any time during the year.
    • Married filing jointly: Assets over $400,000 on the last day of the tax year or over $600,000 at any time during the year.

    Even if the reporting thresholds are met, Form 8938 is only required if the taxpayer is required to file a U.S. tax return.

WHAT ARE FOREIGN FINANCIAL ASSETS?

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TITGA Reports On Status Of IRS Digital Asset Monitoring And Compliance

TITGA Reports On Status Of IRS Digital Asset Monitoring And Compliance

The Treasury Inspector General for Tax Administration (“TITGA”) recently has released a report on the status of efforts by the Internal Revenue Service (“IRS”) to develop the digital asset monitoring and compliance strategy mandated by Congress with the Inflation Reduction Act of 2022.

For purposes of federal taxation, a “digital asset” is defined as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.”[1] This includes non-fungible tokens and virtual currencies.

As part of the Infrastructure Investment and Jobs Act of 2021, Congress had amended sections 6045 and 6050I to require reports from digital asset brokers and from any person engaged in non-financial trades or business who receives more than $10,000 at least in part in digital assets.[2]

TITGA noted that the IRS has created the Digital Asset Advisory Committee (“DAAC”) in February 2022 to provide service-wide collaboration, planning, and information sharing with respect to digital assets. The DAAC has the following goals:

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