Research & Development Tax Credit

WHAT IS THE RESEARCH & DEVELOPMENT TAX CREDIT?

The R&D tax credit is a tax incentive provided by the Federal government and some states to encourage companies to invest in research and development activities. The goal is to provide financial incentives to stimulate innovation and technological advancement, which can contribute to economic growth.

WHAT ARE THE BENEFITS OF THE R&D TAX CREDIT?

The credit generates dollar for dollar tax credits. Prior year tax returns may be amended to claim cash tax refunds. Start-ups, for the first 5 years, may claim cash payroll tax refunds. Unused credits may be carried forward to off-set future taxes.

RECENT EXAMPLES:

  • IT Services Company - $134,452 Current Year Credit

  • Software Development Company - $170,102 Current Year Credit

  • Engineering Company - $109,175 Current Year Credit

FAQs

  • Businesses in any industry may qualify. Most businesses do not claim the credit because they are unaware of their ability to claim the credit.

  • Cash benefit is based on your qualifying expenses and other factors. There is no set maximum for the credit.

  • These expenses typically include costs associated with wages, supplies, and contract research related to R&D activities. R&D activities may include the development of new or improved products, processes or technologies that are:

    • Technological in nature

    • Involve the process of experimentation

    • Involve uncertainty

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