Over the last year, you may have made a substantial investment in research and development to take your business to the next level. You engineered a new product. You created more advanced version of an existing product. You tested several new procedures. You built and customized new software to better support your production processes.<\/p>\n
Did you ever think you might qualify for a special tax credit that recognizes such innovation?<\/p>\n
Not only is it possible but much of the \u201cred tape\u201d associated with obtaining this tax credit has been removed.<\/p>\n
Referred to as the R&D tax credit<\/strong>, it\u2019s a federal credit that may be worth up to 13.5% for every dollar spent on qualified research. In addition, many states will offer an R&D tax credit against state taxes too.<\/p>\n What\u2019s the tax credit\u2019s real benefit? Potentially huge savings.<\/strong><\/em><\/p>\n Let\u2019s say a company has added a few million dollars in expenses as a result of prototyping a variety of products before arriving at a successful version to bring to market. If it qualifies for the R&D tax credit, that company could see hundreds of thousands of dollars in federal benefits and over $100,000 in state benefits.<\/p>\n Activities that may qualify<\/strong><\/em><\/p>\n To get a sense of the activities we\u2019re speaking of that may qualify a company for the R&D tax credit, here are a variety of good examples:<\/p>\n Testing and experimenting with new concepts, formulas, materials, tools, and procedures Putting your efforts to the 4-part test<\/strong><\/em><\/p>\n Naturally, it\u2019s not quite enough to have simply engaged in the activities above. However, on a positive note, many of the past requirements to receive the R&D tax credit have been removed. As a result, the general rule is that an expense that qualifies for the R&D tax credit must meet the following four criteria:<\/p>\n Based on this 4-part test, you\u2019ll typically see activities such as the following excluded from qualifying for the credit, including:<\/p>\n Are there gray areas for qualification? Absolutely.<\/strong><\/em><\/p>\n The question of whether a business qualifies for the R&D tax credit doesn\u2019t always come with an obvious answer. For example, certain software that supports a business\u2019 internal administrative or financial functions may not necessarily qualify for the credit yet we\u2019ve witnessed recent rulings that qualify administrative and financial software when it supports dealings with customers, clients, vendors, banks and other third parties.<\/p>\n Documentation requirements. Complicated tax codes. Plenty at stake.\u2028 Don\u2019t navigate these waters without BRP.<\/em>\u2028<\/strong><\/p>\n Considering how much the R&D tax credit could be worth to your business, make sure you turn to the CPAs who have the highly specialized knowledge to guide your company through the qualification process: Bronswick Reicin Pollack. Our people have an intimate understanding of the complexities associated with the R&D tax credit and can advise you on how to properly support a claim if your business qualifies. We can even evaluate expenses from years past that may actually qualify as R&D expenses eligible for the tax credit today. It\u2019s one more way we\u2019re helping our clients maximize their growth and evolution.<\/p>\n Let\u2019s talk more about it at 847.808.9800<\/em> or email us at info@BRP-CPAs.com.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" Over the last year, you may have made a substantial investment in research and development to take your business to the next level. You engineered a new product. You created more advanced version of an existing product. You tested several new procedures. You built and customized new software to better support your production processes. Did […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[5],"tags":[6,7,8,23,10,11,35,74,48],"class_list":["post-485","post","type-post","status-publish","format-standard","hentry","category-blog","tag-bronswick","tag-brp-cpas","tag-chicago-accountant","tag-chicago-business-accounting","tag-chicago-cpa","tag-chicago-tax-preparation","tag-chicagoland-cpa","tag-rd-tax-credit","tag-tax-credit"],"_links":{"self":[{"href":"https:\/\/bronswick.com\/2021\/wp-json\/wp\/v2\/posts\/485","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bronswick.com\/2021\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bronswick.com\/2021\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bronswick.com\/2021\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/bronswick.com\/2021\/wp-json\/wp\/v2\/comments?post=485"}],"version-history":[{"count":0,"href":"https:\/\/bronswick.com\/2021\/wp-json\/wp\/v2\/posts\/485\/revisions"}],"wp:attachment":[{"href":"https:\/\/bronswick.com\/2021\/wp-json\/wp\/v2\/media?parent=485"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bronswick.com\/2021\/wp-json\/wp\/v2\/categories?post=485"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bronswick.com\/2021\/wp-json\/wp\/v2\/tags?post=485"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
\nSoftware development for sale or internal use
\nGeneral trial and error experimentation<\/p>\n\n
\nDoes it improve a capability, methodology, product or process design?<\/li>\n
\nDoes it rely on physical or biological sciences, engineering or computer science?<\/li>\n
\nCan the expense be tied to an eligible component of your business?<\/li>\n
\nWas there a trial-and-error path taken during development?<\/li>\n<\/ol>\n\n