Final Version of Form 6765

If your company claims the R&D Tax Credit, listen up—2025 just brought some major changes.

The Internal Revenue Service (IRS) officially released the final version of Form 6765 for claiming the Section 41 research credit on 2024 federal tax returns. 

This update brings more detailed disclosure requirements than ever before, which makes it the most significant revision since 2009. These changes are designed to boost transparency, improve accuracy, and streamline how companies report research credit claims. 

Let’s dive deeper into what this means!

Key Updates

The IRS is raising the bar when it comes to tax reporting with the latest changes to Form 6765. These updates are part of the IRS’s ongoing efforts to improve tax reporting consistency, enhance tax administration, and optimize resource management. 

What’s behind these modifications? They are a direct response to stakeholder feedback, especially after the IRS introduced stricter documentation requirements in 2021.

One major change is the introduction of Section G, dedicated to providing detailed business component information. While completion of this section remains optional for the 2024 tax year, it will become mandatory in 2025.

As a result, companies may need to enlist additional expertise to ensure compliance with the new standards.

Most Significant Changes

Business Component Detail Section (Section G)

As we’ve mentioned, this new section requires taxpayers to provide both qualitative and quantitative information for each business component included in the research credit claim:

• Qualitative Information: Taxpayers must describe the nature of each business component and the specific information sought through research activities.
• Quantitative Information: Taxpayers must provide a breakdown of qualified research expenditures (QREs) for each business component, including:
  • Wages
  • Contract research costs
  • Supply costs
  • Computer rental costs

If you are required to complete Section G, you must complete all information in columns 49(a)–(f), 50, 51, 52, 53, 54, 55, and 56 (unless otherwise noted) for at least 80% of your total QREs by business component, but report no more than 50 business components (“80%/Top 50”). 

Miscellaneous Information Section (Section E)

This new section introduces five questions aimed at ensuring consistency in credit calculations, such as the total number of business components generating the QREs and the amount of officers’ wages included in the research credit claim, among others. Think of it as a quality check!

Implications for Taxpayers

The revised reporting requirements introduce a substantial shift in how taxpayers must approach their research credit claims; the complexity and administrative workload have significantly increased.

It’s now more important than ever for taxpayers to carefully review the required disclosures, collaborate across departments, and manage sensitive information with precision.

To facilitate a smoother transition, businesses should start preparing for these changes ahead of time. Partnering with tax professionals can provide invaluable guidance, helping you stay compliant with the new rules while maximizing your potential benefits.

And remember, our experts at Finvisor are here to assist with any questions or challenges you may encounter regarding the revised Form 6765!

Recommendations for Taxpayers

Taxpayers are encouraged to take proactive measures in response to these developments:

• Review and comply with updated disclosure requirements when preparing research credit claims.
• Consult with tax professionals to navigate the complexities of these requirements and optimize research credit benefits.

By staying informed and preparing in advance, businesses can effectively manage their research credit claims and ensure compliance with the IRS’s evolving requirements.

And if all this sounds a little bit overwhelming, Finvisor can guide you through the process, ensuring your business remains compliant while maximizing the benefits of the R&D Tax Credit. 

To learn more about how Finvisor can support your R&D Tax Credit claims, contact us today!