|Seize the R&D Tax Credit|
The Research and Development (R&D) Tax Credit is a government-sponsored cash incentive to stimulate research and development in nearly every industry, and in companies of nearly every size. Small and mid-sized companies, take notice! The R&D tax credit is an opportunity for an immediate source of cash and a significant reduction to current and future years' federal and state tax liabilities.
More than $5 billion in federal R&D tax credit benefits alone are given out annually. Recent changes to IRS regulations have broadened the definition of R&D and have made it easier for companies to qualify their activities for the credit. These changes also allow eligible taxpayers to look back to prior tax years for potential R&D credits that were never claimed.
Any company that designs, develops, or improves products, processes, techniques, formulas, inventions, or software may be eligible. Even a company that has simply invested time, money, and resources toward the advancement and improvement of its products and processes may qualify. It's not uncommon for companies to overlook the fact that their day-to-day efforts of process and product improvement may entitle them to this newly-defined beneficial tax credit.
Though the following is an abbreviated list, if you do, or have done, any of the activities below, you may qualify:
- Developing an innovative product that is new to the market
- Searching for ways to apply new research findings
- Designing and/or evaluating product alternatives
- Modifying significantly the concept or design of a product
- Designing, constructing, and testing preproduction prototypes and models
- Systems processing modeling
- System and functional requirements analysis
- Integration analysis
- Experimenting with new technologies
- Experimenting with new material and integrating the material to improve manufactured products
- Engineering to evaluate new or improved specification/modifications
- Developing new production processes
- Research aimed to significantly cut a product's time-to-market
- Research aimed at discovering new knowledge
- Developing and modifying research methods / formulations / products
- Paying outside consultants / contractors to do any of the above activities
For additional information or a personalized review of your R&D Tax Credit eligibility, please contact your Berntson Porter tax professional at firstname.lastname@example.org or 425.454.7990.