Over 65 industries are eligible to claim the Research and Development Tax Credit by creating a new or improved product, process or technique.
Established in 1981, the Research & Development Tax Credit is a federal incentive that allows companies to reduce income tax liability in the current tax year, and receive a cash refund for taxes paid in the last three years.
Many states have implemented their own version of the R&D Tax Credit, and qualifying businesses can claim both! In 2015, when the Protecting Americans From Tax Hikes (PATH) Act was put into place, the R&D Tax Credit became permanent, which revised qualifications that greatly expanded the eligibility for businesses to qualify. With these changes, qualifying small businesses may claim the Payroll Tax Credit to offset some of their payroll tax liability.
The majority of businesses are unaware that their daily operations could qualify to a dollar-for-dollar Tax Credit, irrespective of industry or company size. An activity that meets the 4-part test is a qualifying research activity and can potentially qualify for claiming R&D Tax Credit.
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All you need to know about R&D Tax Credit
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A quick call with our expert will determine if you qualify. If you have developed anything new or improved, something based on the hard sciences (engineering, computer science, chemistry, biology, physics, etc.) then it’s worth having a chat!
We are always working to make our process as efficient as possible. Once you provide all necessary financial and technical documents to our team, on average, our R&D studies last about 1-2 months, depending on the size and complexity of the study.
Claiming the R&D Tax Credit does not increase your chances of an audit. However, any time you amend your tax returns, the chance of an audit slightly increases. What’s important is that you have an experienced team that provides audit defense to back you up.
This report details the Research & Development activities being conducted and the expenses associated with all activities. The core of the R&D Tax Credit is being able to tie financial expenses with technical research activity. This nexus is what builds the credit and allows companies to claim the benefit on their tax return. Without this nexus, the credit is null. This is where Leyton’s technical report comes in.
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Our in-house team of highly experienced scientists, engineers, tax consultants and attorneys would love to answer all your questions and help you make the most out of your R&D efforts.