All About R&D Tax Credits.
We’ll help you answer your questions about whether or not you qualify.
What are R&D
Tax Credits?
Ever wonder what R&D tax credits are all about? Our R&D tax services will help you learn more so you can make the best decisions for your business.
Do I qualify
for the credit?
Are you curious if you even qualify for the credit? You can find out if you do right now here on our website!
Do my R&D
Activities Qualify?
Find out if your business’ actions are considered research and development activities, and we will help you devise a plan to move forward.
What are R&D Tax Credits?
2015
After more than three decades of extension and renewal, the research credit was made permanent in 2015, when, the PATH Act was signed into law, making the R&D credit program permanent and enabling small businesses to benefit as well (small businesses and startups can now reduce their payroll taxes up to $250k per year up to five years with the R&D credit).
ASC Credit
The ASC credit is 14% of the current year’s qualified research expenses in excess of 50% of the average qualified research expenses for the three tax years preceding the tax year for which the credit is being determined.
1981
Enacted in 1981 with a different title, the Research and Development credit was created as a temporary tax expenditure program meant to embolden innovation research in the United States. Since its inception, the research credit has expired eight times and been extended seventeen times (six times retroactively). Last year, more than an estimated $18 billion in R&D credits were reported by businesses in almost every industry.
Calculations
There are two standard methods of calculating the R&D tax credit – the traditional “regular credit” method and the alternative simplified credit (ASC) method. Under the traditional method, the credit is 20% of the current year’s qualified research expenses in excess of a base amount. One of the factors used in the calculation of the base amount is historically qualified research expenses and annual gross receipts.
OK, but what does this mean for my business?
Our average client has saved $50,000 in dollar-for-dollar tax credits.
Do I Qualify for the Credits?
Acquire Tax Credits has specialized knowledge and experience in R&D Study and tax credit work for dental professionals including dentists, orthodontists, endodontists, and oral surgeons, and other healthcare sectors such as physicians, surgeons, and dermatologists.
More than 40 industries have qualifying research expenses, and certain sectors lend themselves to R&D activity more than others.
Examples include, but are not limited to the following.
- Agriculture
- Apparel/Textiles
- Architecture
- Brewing
- Chemical
- Construction
- Engineering
- Electrical/Mechanical Contracting
- Machine Shops
- Manufacturing
- Medical Device & Equipment
- Software
Learn More
Read about our past R&D Studies and how they might apply to your business or healthcare practice. Discover if you qualify for credits today!
Do My R&D Activities Qualify?
The R&D tax credit is available to taxpayers who incur incremental expenses for qualified research activities (QRAs) conducted within the U.S. The credit is comprised primarily of the following qualified research expenses (QREs):
- Internal wages paid to employees for qualified services.
- Supplies used and consumed in the R&D process.
- Contract research expenses (when someone other than the taxpayer’s employee performs QRAs on the taxpayer’s behalf, regardless of the success of the research).
01.
The activity must rely on the principles of hard science, such as engineering, computer science, biological science, or physical science.
02.
The activities must relate to developing a new or improved product or process intended to improve functionality, performance, reliability, or quality features.
03.
Technological uncertainty must exist at the outset of the development activities. Uncertainty exists if the information available at the outset of the project does not establish the capability or methodology for developing or improving the business component, or the appropriate design of the business component.
04.
A process of experimentation (e.g., an iterative testing process) must be conducted to eliminate the technological uncertainty. This includes assessing a design through modeling, proof of concept, computational analysis, or trial and error testing.
Qualifying Research Activities (QRA's) Typically Include One or More of the Following:
- Development of products or processes using specific know-how that is treated as a trade secret or is patentable.
- Development of new or improved products in which the state of the art is advanced and that required one or more design iterations to achieve.
- Development or incorporation of a new technology in order to catch up to a competitor.
- An attempt to develop a new or improved product or process that was eventually abandoned.
- Implementation of a new process or improvements to an existing process relating to manufacturing, testing or quality control.
- Development of new products in which technical uncertainties must be overcome in order to satisfy the requirements of a customer specification or performance requirement.
QRA's are performed by employees who conduct, directly supervise, or support the development effort.
Conduct R&D Activities:
Employees who conduct research activities are generally involved in hands-on efforts and are engaged in identifying and resolving technical problems.
Direct R&D Supervision:
Direct supervision of research activities concerns immediate supervision (first-line management) of qualified research activities such as an engineering manager who directly supervises a team of engineers and technicians, but who does not perform hands-on development work.
Support R&D Activities:
Support of research activities refers to activities performed that support those employees conducting or supervising the qualified research activities.
Want More Information about Qualifying Activities?
Find out if your activities meet R&D tax credit standards. Our experts can help you to discover what you could get back. Reach out to us today!
Still Have Questions?
All this information may seem intimidating, but when you partner with Acquire we will do the heavy lifting for you to help your business maximize its savings. It is never too early to get started on your financial and investment planning. Tell us more about your goals, and we will get you started on a plan to achieve them.
