Global Tax Insights
Reduce your Tax Liability & Improve Cash Flow – R&D Tax CreditsApril 24, 2013
If your company has spent time and resources developing new or improved products and processes, you may qualify for the research and development (R&D) tax credit.
If your company has spent time and resources developing new or improved products and processes, you may qualify for the research and development (R&D) tax credit. In a period where many business owners are experiencing rising income tax rates for 2013 and beyond, the time has never been more urgent to extract any federal, and possibly state, tax benefits from these activities.
The R&D Tax Credit is designed for both formal R&D work done in laboratories as well as for experimental development work that can occur on the shop floor and even be earned during the technical struggles leading up to shipment of a new or improved product. Additionally, costs incurred to improve the process by which a company produces its product can qualify.
R&D Tax Credits are an actual dollar for dollar reduction of a taxpayer’s federal income taxes. In many cases an R&D Tax Credit can reduce state taxes depending on the states particular laws. The R&D Tax Credit allows qualifying businesses to recoup a portion of their expenses related to business improvement and product development. Companies can also claim credits from prior years and request a refund of taxes paid.
What Activities Qualify?
- Developing new improved or more reliable products, processes or formulas
- Developing patents
- Conducting testing and developing prototypes, models, or samples
- Performance testing
- Developing new technology
- Experimenting with the use of new materials and compounds
- Upgrading systems or software
- Many others
- Machine Shops
- Food Sciences/Manufacturers
- Software Developers
- Tool and Die
- Other Qualified Businesses
KLR’s R&D Credit team can help your company identify qualified research activity, quantify associated costs, properly document research expenses and calculate the credit. Even in situations where companies have already been claiming some R&D credit on past income tax returns, KLR has very often been successful in generating additional credits by performing a more detailed analysis of a company’s qualifying activities. Receive a complementary analysis of your company’s R&D Tax Credit qualifications today.