R&D Tax Credit
You've invested in your business. It's time to claim your credit.
The R&D tax credit is available to any U.S. business that spends time and resources on new development, improvements, or technological advancements in effort to improve upon its products or processes. The credit can also be available to American Business owners that have improved upon the performance, functionality, reliability or quality of existing products or trade processes.
What's the benefit?
The R&D tax credit creates money that goes back in your company’s pocket to fuel further innovation and growth.
Why haven't I heard of this?
The credit has been around since 1981, but many companies couldn't take advantage of the tax incentive until 2015.
Encouraging innovation in businesses across the United States.
The U.S. tax court and states alike have ruled in favor of business activities that make jobs faster and more efficient. This could be anybody from a contractor who uses new materials to create green, energy efficient improvements, to a manufacturer improving production processes through investment in new technology.
The R&D tax credit is now available to any U.S. business that spends time and resources on new development, improvements, or technological advancements in effort to improve upon its products or processes. The credit could also be available to American Business owners that have improved upon the performance, functionality, reliability, or quality of existing products or trade processes.
"Too often small and medium businesses just simply are not taking advantage of the R&D... 90% of life is just showing up. The same is true with tax. Business owners should learn about the tax incentives available for you. These incentives can help your business succeed and thrive."
- Senator Chuck Grassley, speaking about the R&D tax credit
Hear the full speech.
Recent Tax Credit Examples
$148,000 - Dentist
$18,000 - Printing Company
$1,200,000 - Agriculture Farmer
R&D Tax Recovery Qualifications
What might qualify?
Wages paid to employees for qualified services
This includes amounts considered to be wages for federal income tax withholding purposes.
Basic research payments
Payments made to qualified educational institutions and various scientific research organizations, allowable up to 75% of the actual cost.
This may include any property not subject to depreciation used and consumed in the R&D process.
Third party contract expenses
This includes expenses for performing QRAs on behalf of the taxpayer, regardless of the success of the research, allowable up to 65% of the actual cost.
The R&D tax credit may apply to any taxpayer that incurs expenses for performing Qualified Research Activities (QRA) on U.S. soil. The credit is a percentage of qualified research expenses (QRE) above a base amount established by the IRS in a four-part test:
Elimination of Uncertainty
Process of Experimentation
Technological in Nature
You could be leaving thousands of dollars behind.
Many misconceptions surrounding the new regulations are that it is difficult to apply for the credits and that it is restricted to a small group of industries. This could not be further from the truth. The business tax incentive process is easier to navigate and you may be able to go back three years to file for credits that were earned but not claimed.
Now is the time to work through the Business Qualification Process and see if you have left some valuable business incentive credits on the table.