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Research & Development (R&D) Tax Credit Studies

Benefit:

  • Increased cash flow due to lower taxes based on tax credits for qualifying research and development costs in addition to existing tax deductions
  • Establishment of systems to capture R&D costs for future years' tax credits
  • Potential for amending prior three years' open returns for additional tax credit if qualifying expenses found

Who's most likely to benefit:

  • Companies engaged in:
    • Product and process research, development, design, engineering, or testing in technological areas using principles of physical, biological, chemical, engineering or computer sciences in which the development or outcome is uncertain
  • Manufacturing and technology companies are often eligible

Description:

Most companies engaged in research and development (also called research and experimentation) already claim tax deductions for their costs. For qualifying R&D expenses, however, those same expenses can also generate tax credits as well – a double benefit from the same expenses.

In an R&D tax credit study, a tax professional identifies expenses that qualify for both the Federal and state R&D tax credit. These may include not only materials used in R&D, but also qualified wages for personnel engaged in research and often certain outside consultants. If significant tax credits are identified, the organization may choose to file amended tax returns to capture any open years' tax credits. Our tax professionals can also assist with any amended returns required.