When will I see my credit?

The timeline of receiving your R&D tax credit varies based on several factors, including if you utilize a PEO, a payroll provider, or Gusto.

• PEO: You can begin to utilize your payroll credit in the following quarter after you file your business income tax return. For example, if you file your taxes on 4/15 (Q2), your utilization will begin on 7/1 (Q3). Starting in Q3, your PEO provider will continue to impound your applicable employer payroll taxes on each payroll run. At the end of Q3, credits are captured on the Q3 payroll tax filing on Form 941. The IRS then issues a refund to the PEO for the tax that was "overpaid" during Q3, and you will see your credit applied on a subsequent invoice from your PEO.

• Payroll Provider: You can begin to utilize your credit in the following quarter you file your business income tax return. For example, if you file your taxes on 4/15 (Q2), your utilization will begin on 7/1 (Q3). Starting in Q3, your payroll provider will continue to impound your applicable employer payroll taxes on each payroll run. At the end of Q3, credits are captured on the Q3 payroll tax filing on Form 941, or an amended return on Form 941X after the original return is filed. Not all payroll providers will claim the credit on an original 941. 

• Gusto: Gusto offers Real-Time Processing. With real-time processing, you begin to utilize your payroll credit in the quarter after the quarter you file your taxes. For example, if you file your taxes on 4/1 (Q2). Beginning on 7/1 (Q3), Gusto will "use" the R&D tax credit that was calculated and reported to them on each payroll run.