R&D Tax Credit

This Is Why

We Should Work Together

You have worked hard to develop your business and have spent a significant amount of dollars refining processes and creating value. Your business could save up to $250,000 through the R&D tax credit.
We help you reap the benefits of the R&D tax credit by maximizing your savings while doing the heavy lifting. We handle the whole process so you can skip the paperwork and get back to running your business.
Your business could save thousands through the R&D credit, so it is important it’s done right not only to maximize the amount of the credit you receive but to be compliant with the IRS and state tax authorities. We handle the R&D tax credit claims process from start to finish and provide the necessary documentation to support your claim with the IRS. Claiming the R&D tax credit can be cumbersome, but we make the process easy for you.

Full Service

We handle the full R&D tax claim process for you. That includes identifying eligible R&D expenses, completing, and filing the correct paperwork, and making sure your credit is accurately applied through your payroll, if applicable. If not, we help you to apply your credit against any amount of income tax due.

Bullet Proof Documentation

Our team of experts makes the R&D claim process and your paperwork bulletproof. We also ensure your payroll provider, tax preparers, and accountants are all on the same page, if applicable. This ensures your credit is maximized and will stand up to IRS scrutiny should it arise.

Comprehensive Service

When you work with our team, get bookkeeping, tax return preparation, and R&D credit support all under one roof. We already know your business and your numbers like the back of our hand: That means we make the whole R&D credit claims process fast and easy and therefore can maximize your savings.

Reduce Taxes Owed

R&D tax credits offset your federal (and some state) income taxes and apply as an offset of the taxes you owe. They may also apply to company paid payroll taxes. If you qualify and meet the four-part test, claiming the R&D tax credit is a no brainer and can put money back into your pocket that can be used for working capital, future R&D, etc.

Who Qualifies

Companies that have patents, or are designing, developing, or building new products commonly see the value and can claim R&D credits as much as 3 -years retroactively, and each year going forward. Contrary to a common misperception, R&D tax credits are not limited to scientists, medical researchers and others wearing white lab coats.

States Offer R&D Credits

Today, about forty states offer their own version of R&D tax credits, many of which are modeled after the federal R&D credit program. Each state is different, so it is important that you use an expert that knows your state’s specific guidelines and filing requirements. We are well versed in all fifty states and can guide you through the process.

faq

Frequently Asked Questions

Qualifying R&D expenses and/or activities are those which pass this four-part test:

 

  • Technical uncertainty. The activity is performed to eliminate technical uncertainty about the development or improvement of a product or process, which includes computer software, techniques, formulas, and inventions.
  • Process of experimentation. The activities include some process of experimentation undertaken to eliminate or resolve a technical uncertainty. This process involves an evaluation of alternative solutions or approaches and is performed through modeling, simulation, systematic trial and error, or other methods.
  • Technological in nature. The process of experimentation relies on the hard sciences, such as engineering, physics, chemistry, biology, or computer science.
  • Qualified purpose. The purpose of the activity must be to create a new or improved product or process, including computer software, which results in increased performance, function, reliability, or quality.
If your business has less than $5 million in annual revenue, and it has been less than five (5) years since your first gross receipts/sales, you can frequently reduce your Social Security Payroll tax liability under the PATH Act R&D credit. If you do not qualify under the PATH Act R&D Credit, you can take regular R&D Credit against income taxes (rather than against payroll taxes).

We recommend anyone who plans to claim the R&D credit to get a formal study done by a qualified expert. An R&D study determines the total amount of the R&D tax credit and collects the necessary documentation to support the claim.

As a part of filing the R&D tax credit, you are required to submit the relevant tax forms to the IRS. You must be able to support your stance on the technical and financial position you are claiming and be prepared to support it in case the IRS audits your claim. If the IRS audits the claim and you cannot support the claim you filed, you will need to refund the money to the IRS and run the risk of potentially paying penalties and interest. R&D tax credits are heavily scrutinized by the IRS. Once you have been audited and errors are identified, the IRS can audit your claims for up to 7 years prior.
Unlimited, if applying the R&D credit against income taxes. These credits can range between 5% and 15% of qualifying R&D costs. If taking the PATH Act R&D credit, a company is eligible to receive up to $250k that can be taken against payroll taxes and the remainder can be applied against income taxes.
Today, about forty states offer their own version of R&D tax credits, many of which are modeled after the federal R&D credit program. Each state is different, so it is important to check your state government’s website page or reach out to us and we can talk to you about this in more detail.
Yes, we can assist you with filing an amended tax return to claim the R&D credit for previously filed tax returns for the past three year, but you are not allowed to take the PATH Act R&D credit on an amended tax return.

With the enactment of the Protecting Americans from Tax Hikes (PATH) Act of 2015, federal R&D tax credits became permanent. In the past, Congress would extend the R&D credit for another year or two.

A business can take the credit for all open tax years—generally the last three or four years plus the current year. R&D tax credits may carry forward 20 years.

We help businesses with every step of claiming R&D Tax Credits. We will:

 

  • Identify and calculate qualifying R&D expenses
  • Prepare necessary forms with the IRS to obtain approval of credit. 
  • Prepare all required technical and financial supporting documentation, including evidence of research time, R&D payroll expenses, etc. This is a necessity in case of an IRS audit.
  • Coordinate with your tax preparer and payroll provider to ensure your records and taxes are accurate
  • Ensure the credit is applied correctly and accurately against your payroll liabilities
Absolutely. We’ll calculate the R&D tax credits and provide the necessary documentation for your tax preparer to file. We are happy to work with you and help you out in any way that we can.
As a small business owner with many responsibilities, The ABC Firm has been invaluable to our company. They have kept us organized and on track with our finances so we can focus on what we do best.
Harry James

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+1 888-413-6708
+1 888-413-6708