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R&D Tax Credit
What is the R&D Tax Credit?
The Research and Development Tax Credit was originally introduced in the Economic Recovery Tax Act of 1981 and is a government-sponsored tax incentive that rewards companies for conducting R&D within the United States. The credit was implemented to incentivize innovation throughout the economy and to keep technical jobs here in the U.S.
However, what constitutes R&D with regard to the credit is much more expansive than business owners realize, with activities related to applied sciences and other technical projects qualifying companies from numerous industries.
The R&D Tax Credit is for businesses of all sizes, not just your Fortune 500 Companies with research labs – and many companies are eligible, with an expansive list of activities qualifying for the credit.
Opportunities for your business:
The Research and Development (R&D) Tax Credit remains one of the top opportunities for businesses to substantially reduce their tax liability.
Companies from a wide-range of industries can qualify for federal and state tax savings high to enough to allow companies to grow their operations, invest in new products/technologies and service lines, and hire new employees
More companies than ever before can benefit from this valuable incentive.
What Qualifies for the R&D Tax Credit?
If your company performs any of the following actions listed, your business likely is entitled for the R&D Tax Credit:
- Develops or designs new products or processes
- Develops or improves upon existing prototypes and software
- Enhances existing products or processes
The R&D tax credit is designed to inspire and encourage innovation. As such, it is equally available to companies that attempt transformative improvements to current products or processes and companies that undertake revolutionary activities. The development or advancement effort does not have to equate to something as wild as the creation of flying vehicles. The regulations define research as “activities constituting a process of experimentation “intended to eliminate ambiguity” based on intel available to the taxpayer at the outset of the project”.
why m&A?
The nature of the R&D Tax Code is difficult and complex which results in companies not always taking full advantage of the R&D Tax Credit. At Mock & Associates, LLC, we have a deep understanding as well as proven track record of the Internal Revenue Code which only comes from multiple years of experience.