The short answer: Section G of Form 6765 is required for tax years beginning after 2025. For calendar-year businesses, the research happening right now is the first that will be reported under it. Section G asks for R&D credit information by business component, not as one summary number. The records that support it are easiest to build while the work is underway, and hardest to rebuild next March.
What changed, and when
The IRS introduced Section G as part of the redesigned Form 6765. It was optional for the 2024 and 2025 tax years. That relief ends with 2026.
| Tax year | Section G status |
| 2024 | Optional |
| 2025 | Optional (returns filed in 2026) |
| 2026 and later | Required for most filers (returns filed in 2027) |
Two groups keep optional reporting in 2026: qualified small businesses electing the payroll tax credit, and filers below certain QRE and gross receipts thresholds. Everyone else claiming the credit on a 2026 return should plan to complete it.
What Section G asks for
A business component is the product, process, software, technique, formula, or invention at which your researched was aimed. Section G asks you to report each one, along with the qualified research expenses tied to it. In practice, that means:
- Business components: a description of each one being claimed
- Wages by activity: qualified wages split into direct research, supervision, and support
- Other QREs by component: supplies, contract research, and computer rental costs tied to each component
- Supporting detail: the information behind each component, such as what was uncertain and how it was tested
None of this is new work for a well-run R&D study. What is new is that it now appears on the return itself.
Why year-end matters
Most companies do not track research spending by project. Payroll sits by department. Supplies sit by vendor. Contract research sits in accounts payable. Tying all of that back to specific business components after the year closes means interviews, estimates, and reconstruction.
That gets harder with every month that passes. Engineers move on to new projects. Memories fade. Emails get archived. The businesses that feel Section G the least will be the ones already organizing records around projects, not around the general ledger.
Three months remain in the first Section G tax year. That is enough time to set up tracking for the work still underway, and to capture what happened earlier in the year while people still remember it.
A practical checklist before December 31
- List your likely business components now. Start with the products, processes, and software your team worked on in 2026.
- Map your people to components. Identify who did direct research, who supervised it, and who supported it.
- Tag spending as it happens. Add project or component codes to supplies and contract research going forward.
- Capture the story while it is fresh. Note what was uncertain and how each component was tested.
- Bring your CPA in early. Year-end planning is a better time for this conversation than filing season.
The question that comes before documentation
Section G makes solid documentation the standard for every claim. It does not answer the more important question: should each component be claimed at all?
Not all innovation qualifies. A new product line may include real research and routine engineering side by side. A process change may be an improvement without being qualified research. Reporting by component makes those distinctions more visible, not less. Getting them right matters more than growing the number.
That is where we start. Our engineers and tax professionals evaluate whether each component actually meets the four-part test before any documentation is built around it. If something does not hold up, we say so up front, to the business and to its CPA.
For CPA firms
Your clients will look to you first when Section G shows up on their 2026 returns. A short conversation now, before the books close, can save a difficult one in March. If you want a partner who evaluates fit first and keeps you in the advisor’s seat, we welcome the conversation.
Get ahead of Section G
If your team claims the R&D credit, or plans to for 2026, now is the time to confirm how your records line up with Section G.
Schedule a free R&D review or contact our team. For the full timeline and exemption details, read our Section G update.
This article is general information, not tax advice. Eligibility and reporting requirements depend on each taxpayer’s facts.
