Given the amount of innovation that was necessary for many to get through the pandemic, the Research and Development Credit can certainly help on your income taxes. Many might think that it is only for pharma, biotech, and technology companies, but nothing could be further from the truth.
Qualified research activities for the purposes of the credit include
1 – Developing a new or improved product
2 – Developing a new technology
3 – Creating a new production process
4 – Improving current processes
5 – Developing or improving software
6 – Developing prototypes or models
The credit is calculated as a percentage of the company’s expenses related to R&D activities. Record keeping and documentation on this can be difficult, but the amount of the credit is unlimited, depending on the circumstances.
Before any of you get too excited, we’re talking about creating a new software, technology, or process, not just buying and implementing one. This is one of the general business credits. As such, it has nothing to do with any of the regular stimulus package money and can be done in conjunction with any of it.
Let me leave you with this.
Given the tardiness of the IRS this year in publishing the 2020 forms, everything is going to be later than usual. I’m not scheduled to get the final updates on my tax software package until somewhere between this Friday and the end of the month.
Meanwhile, the IRS and the current administration has not backed up the filing deadlines even a day.
This means that we’ll have a whole two of three weeks to file S-corps that are due March 15th.
Get your work into us today. If there are unanswered questions, or items that we need from the year end questionnaire, don’t wait expecting us to have nothing but time to handle it. Please remember that if your final answers to everything are not into us by the end of February, we cannot guarantee that your S-Corp return will be completed timely.
This tax season is a nightmare.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. If there is anything you need, whether you are a current client or not, you have but to ask. I’m here and I remain,
Accounting Solutions Ltd.
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