Are R&D credits applied before child tax credits on my S corporation’s taxes?

Feb 15, 2019
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I am amending my filings for past tax years to claim R&D credits with my small business S corporation. As these credits pass through to my K-1, my tax liability is very small. Will these R&D credits apply before my child tax credits?

The R&D credits would be deducted at the business level to lower your overall net income. The deductions on your business income will reduce your taxable income. Your child tax credits (personal exemptions) will get applied to your lowered taxable income after your standard deductions or itemized deductions are applied.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Shane R. Fisher, CPA, is vice president of finance at TriCorner Homes in Harrisburg, Pa.

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