IRS publishes finalized Form 6765 for the R&D tax credit
Executive summary
At the end of January 2025, the IRS finalized and published the updated Form 6765, Credit for Increasing Research Activities, along with new instructions. The final form, dated December 2024, incorporates feedback from stakeholders and requires additional information for the 2025 filing season. Key updates include reporting the number of business components, officers’ wages, new categories of qualifying research expenditures (QREs), details on acquisitions or dispositions, detailed controlled group statement, and 280C election statement when a reduced credit is not elected. While Section G, which requires detailed reporting to substantiate business component qualification, is optional for tax year 2024, it will become mandatory for subsequent years. The Form 6765 updates bring significant changes to how companies must document and claim their research credits.
Key updates to Form 6765
The final version of Form 6765, dated December 2024, requires taxpayers to report additional information with the filing of their 2024 federal income tax returns including:
Notable changes include:
- Number of business components associated with the credit claim
- Total amount of officers’ wages included within qualifying wage expenditures
- New categories of qualifying research expenditures (QREs)
- Whether the taxpayer determined QREs according to the ASC 730 Directive
- Whether the taxpayer made any acquisitions or dispositions of a major portion of a trade or business in the tax year
- Required statements to be attached to federal income tax return including a more detailed controlled group statement providing QREs and additional information needed to compute each group member’s credit and Section 280C statement that lists capitalized expenses when a 280C election is not made.
While the new form also includes Section G, Business Component Information, for reporting quantitative and qualitative information for each business component included in the credit claim, this section is optional for tax years beginning before 2025.
What this means for businesses and how to prepare
For companies claiming the Research & Development (R&D) tax credit, these new requirements mean:
- Increased documentation and recordkeeping at the business component level. Review your existing R&D credit documentation to identify any gaps related to the new reporting requirements.
- Additional time and effort needed to gather and report data. Involve finance, payroll, human resources, technology and R&D teams to ensure all required data is timely and accurately collected and reported.
Washington National Tax takeaways
The revised Form 6765 represents a major shift in R&D tax credit reporting. Businesses should take proactive steps to adapt to these new requirements to avoid compliance challenges. Further changes to the form or its instructions are not anticipated for the 2025 filing season, but minor changes are expected to the instructions for the 2026 filing season. RSM US LLP will continue to contribute essential feedback to the IRS during the open comment period. If you have questions or need assistance in preparing for these changes, reach out to your RSM US tax advisor for guidance