Form 6765 Section G in 2026: What Changes and How to Prepare

Many owners first hear about Section G from their CPA, usually as "we need this by project now." This guide covers what the form asks for, who has to complete it, and the habits that make it painless. This is general information, not tax advice. Your CPA decides how your return is filed.

What Section G is

Form 6765 is the federal form for the research credit. Section G is the part that reports qualifying research costs by business component, the IRS term for a project. That means a product, process, piece of software, technique, formula or invention that you sell or use in your business.

For each business component listed, the form asks for a name or identifier, the type (product, process or other) and the costs: wages, supplies, computer rental and contract research. Wages are split three ways: people doing the research, first-line supervisors of that research, and people directly supporting it.

Optional for 2025, required for 2026

Section G is optional for 2025: a dry run on the 2025 return if you want one.

Starting with 2026 tax years, it is required for most claimants. For a calendar-year business that is the 2026 return, filed in 2027. The work that goes on it is happening in your shop now.

Who can skip it

Two groups are excepted on an original return:

• Smaller claims. A business with total qualifying research costs of $1.5 million or less (measured across related companies under common control) can leave Section G blank on an original return. Its average annual gross receipts over the prior three years must also be $50 million or less.
• Qualified small businesses using the payroll offset. These businesses (under $5 million in gross receipts and no receipts before the last five years) can use up to $500,000 a year of credit against payroll taxes. Electing that offset on the form removes the Section G requirement.

Two cautions. The size exception applies only to an original return. Skipping the section does not change what supports a claim: the four-part test still has to be met for each project, and the wages, trial material and contractor costs still have to be tied to it. You can skip the form section. You can't skip the records.

Amended claims need it regardless of size

If you amend a prior year to claim a credit you missed or under-claimed, the size exception does not apply. The form carries an amended-return indicator for each business component that is new or increased since the original return. On top of that, an amended refund claim must identify the business components, the research activities performed and the qualified expenses. It may also be asked for the individuals who performed each activity and the information each sought to discover. That is the same project-level detail Section G asks for, written out.

Open years can generally be amended, usually 2023 onward; your CPA confirms the deadline for each return. See our guide on amending prior years for the R&D credit.

The 80% rule: up to 50 business components

You do not have to list every project. Claimants report the business components that together make up 80% of total qualifying research expenses, up to 50 business components, listed from largest to smallest. Whatever is left is reported on one line as a group. A separate line asks for the total number of business components, including the ones you grouped.

Each listed project needs its own figures for wages, trial material and outside help, which means knowing hours by person per project.

Why time tracking is the whole game

Section G wants wages by project. If you know who worked on which project and roughly how long, the columns fill in from your own records. If you don't, somebody is estimating a year later.

The courts have made the same point. In Little Sandy Coal (7th Cir. 2023), a shipbuilder lost its credit because it could not show from its records which of its employees' work was experimentation. Records made while the work was happening carry far more weight than a story rebuilt a year later.

How to set up project-level time tracking this quarter

None of this needs new software. A spreadsheet, a timecard field or one flag in your ERP will do.

1. Give each hard job a project code

   With your shop lead, list this year's jobs where nobody knew at the start how to make the part, hold the tolerance or hit the cycle time. Give each one a short code (the job number works) and add it as a field on the timecard. Running an ERP? One R&D flag on the job number does the same thing.

2. One line per person per week

   Each week, every machinist, programmer, engineer and supervisor who touched a coded project writes one line: project code and hours. A supervisor can do it for the crew. Not minute-by-minute logs; an honest weekly split, written that week.

3. The five-line problem note

   When a hard job starts, write five dated lines: what we are trying to make work, what we don't know how to do yet, what we plan to try first. It shows the question existed before the answer.

4. Keep trial material apart from production material

   Material scrapped in trials and first articles can count. Material for ordinary production runs generally doesn't. Put the project code on the invoice, pick ticket or scrap ticket when material goes to a trial, and nobody has to sort it out at year end.

5. Three folders per project

   Concept and design: drawing, quote notes, the five-line note, the PO if a customer is paying. Technical challenges: setup and program revisions, fixture versions, scrap tickets, photos, the email saying why an approach was dropped. Testing and validation: first-article and inspection reports, test data, customer approval. Sweep loose files in once a month.

Start with the jobs on the floor now, and the 2026 return gets a full year of project-level numbers instead of a reconstruction. The Shop Floor Evidence Guide lists every record type that supports a claim. If you run a job shop, the manufacturing page covers which jobs tend to qualify.

What this looks like with CreditLab

We build the study from your own records at the business component level, so Section G comes out of the study, not a scramble at filing time. An independent R&D tax specialist reviews every study twice. Your CPA receives Form 6765, including Section G, ready to attach; we do not prepare or file returns. Afterwards you get the record-keeping system above and a 30-minute check-in each quarter.See how we work, pricing and the FAQ.

Related guides

• Amending prior years for the R&D credit
• Section 174A after the One Big Beautiful Bill Act
• The R&D credit for job shops