What is the R&D Tax Credit?
The Research & Development (R&D) Tax Credit is a government incentive available to companies who create or improve a product or process used by their business. Companies may claim on eligible expenses for activities that fit the IRS criteria for research and development. This dollar-for-dollar credit offsets your income tax liability or payroll tax liability.
What is an R&D Study and how does it help my company claim the R&D Tax Credit?
Leyton’s highly qualified tax and technical teams produce a thorough technical report to help substantiate each claim and ensure that the value of each claim is in full compliance with relevant tax legislation.
Your R&D study will investigate what qualified activities have been performed during the relevant tax years and to what extent associated expenditure qualifies. To the extent you have documentation readily on hand, your process will be even more efficient from your team’s perspective.
Why is January & February the perfect time to get started on my R&D Study?
The sooner you have your study prepared, the sooner you can start claiming R&D Tax Credits for your business! We will get you engaged for the study and introduced to your tax and technical team. They will work with you to confirm if it indeed makes sense for you to claim the credit on your 2020 Tax Return and work with you to determine:
- The optimal timeline to finalize the credit calculation and technical report for you to claim timely on your income tax return,
- The financial and technical documentation to collect now to jump-start our process, and
- The documentation we need to have once 2020 has ended.
Through years of experience as R&D Tax Credit experts, we have observed that companies often file their claim at the last minute, or extend their deadlines. Getting a head start on your R&D Study can allow you to file your taxes in a timely manner and start claiming the benefits sooner rather than later.
What kind of documentation do I need to get started on my R&D Study today?
To get started on the technical portion of your study, we require technical documentation that supports any development during the year.
These technical documents can include the following:
- Lab books
- Technical reports
- Documents describing the research process
- PowerPoint presentations on projects
- Documentation of experiments/test/data/results
- R&D project meeting notes
- Test lab reports
At this time, to address the financial portion of your study, we may request prior years’ tax returns to start substantiating your claim and confirm that it does make sense for you to claim the credit from a financial perspective.
How does an early start on the R&D Study benefit my CPA?
Many CPAs and tax professionals must wait till the last minute to file their clients’ tax returns because they are waiting on their R&D Study to be completed. By building an R&D Tax Credit claim now, your CPA may be able to finalize your company’s tax return earlier. Ideally, this will make your CPA’s life easier, because they will face less of a time crunch during busy tax season!
I am ready to start building my R&D Study! What are the next steps?
Reach out to us today! We follow a simple 3 step process to get you started:
Step 1: Get in touch with our R&D Tax Credit experts to establish your company’s eligibility for the R&D Tax Credit.
Step 2: Gather technical documentation and attend an initial assessment call with our tax and technical teams to receive your credit estimate and establish an optimal claim timeline. Continue to engage with your dedicated team via emails and phone calls to review eligible projects and costs to build your claim.
Step 3: File your R&D Tax Credit claim!
About Leyton:
Founded in 1997, Leyton is a global innovation funding consultancy dedicated to helping our clients improve their business performance. In the US, our specific expertise is in optimization of Federal and State Research & Development (R&D) Tax Credits. As a business, we want to help unleash our clients potential and be a strategic partner in their evolution and growth.
