Consulting For And Preparation Of The Research & Development Credit

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The Research & Development (R&D) Credit provides a dollar for dollar credit against income tax on the federal return. If your business qualifies for the credit, we can go back as many as three years to amend returns and claim the credit.

If the entire credit is not fully used in those years, it can be carried forward as many as twenty to reduce or eliminate income taxes payable in the future.There are two basic R&D Credits.

The first is for small business start-ups to cover the employer side of payroll taxes. This credit limits out at $500K annually and can be taken for up to 5 years.

The other more common credit is a dollar for dollar credit that reduces income tax. It is taken on qualified R&D Expenses. There is no upper limit on this credit.

The qualifications for the credit are as follows:

The activity must be related to improving the functionality, quality, or reliability of a business component.
The process must be technological in nature being based on a hard science such as engineering, physics, and chemistry or the life, biological, and computer sciences.
At the beginning of the process, there must have been an uncertainty as to its success in creation or implementation.
There must have been a process of experimentation with multiple design alternatives or a trial and error approach.
Successfully completing these credits is no small feat. This isn’t as simple as filling out one of the usual IRS Forms.

If you would like to see if your firm potentially qualifies for the credit, please contact us today.

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