Companies can increase immediate cash savings if they can offset FICA with R&D payroll credits first and have the excess of other credits refunded. For example, if an employer generates $100,000 of 2019 R&D payroll credits, qualifies for $250,000 of employee retention credits, and has $100,000 of employer-related FICA to pay on its Q2 quarterly Form 941 filing, the R&D credits can be used to offset the FICA due, and $250,000 of the employee retention credits will be refunded as cashback to the taxpayer. Unlike R&D payroll offset credits, which would carry forward to future quarters, employee retention and FFCRA credits in excess of FICA due result in a cash refund to taxpayers.
For companies that opt to defer payroll taxes, R&D payroll credits and other payroll offset incentives are still timely and value-add as amounts in excess of credits can be deferred, limiting payments due later.
Companies that take advantage of SBA loans and are not eligible for certain COVID-19 payroll tax relief can still use R&D credits to offset FICA if they meet certain criteria, including:
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