About the R&D Tax Credit
The Federal and State Research Tax Credit has recently become one of the most lucrative funding programs for companies developing products or processes on US soil. Gain Up to 20% Federal and 15% State of your current expenses for activities that many companies are already engaged in!
How it Works?
The research tax credit rewards taxpayers with a credit for engaging in qualified research activities (QRAs) by providing a credit for a portion of their qualified research expenditures (QREs) incurred in these activities. Applicable to open tax years, the RTC can be deductible under Sec 174 for up to 3 past open tax years.
Who Qualifies?
If you are improving your current products or processes, you can be eligible for the Research Tax Credit. Claimable every year, the Research Tax Credit can be a significant cash flow contribution to any size company. However, it can be a complex and time consuming process to meet the IRS eligibility requirements.
Should I Investigate?
Estimates indicate that less than 20% of companies that can quality actually claim the Research Credit. The objective of the R&D credit is to build jobs in the United States and to enable U.S. corporations to develop the best products with the most efficient processes world wide.
Not Just for Laboratories
Sec 174 allows Qualified Research Activities (QRAs) to be performed outside of a laboratory setting, as long as they meet the criteria of the 4 Part Test. This includes corporations conducting QRAs in a commercial setting attempting to resolve technical uncertainties in a related field of science.
Four - Part Test
The determination of QRAs and QREs is based on a Four- Part Test defined as follows:
- Elimination of uncertainty
- Development of a new or improved business component
- Activities are Technological in nature
- Conducted by a process of experimentation
IRS Support Documentation Requirements
The IRS requires contemporaneous and nexus documents that form evidence of product development and pass the ‘Four – Part Test’. SHAIN will seamlessly create these documents as you conduct your work, and unlock new knowledge for your team about your product development initiatives.
