Posted by Jeffrey M. Feingold on 02.05.14
The wireless communications industry has been research-driven for the past 20 years. The future of each company depended and continues to depend on their R&D staffs. The Information and Communication Technologies (ICT) have driven innovation around the world even affecting our social behaviors. Few, if any, industries have been and are so competitive. Product cycles are short and fast and driven by innovation. Having enough money to drive the research is crucial for them. This makes tax breaks like R&D credits even more important.
The federal government encourages this research by providing tax incentives like the R&D tax credits. Many states also have tax credits available. These credits can save hundreds of thousands of dollars in taxes that can be used to move the company forward. The R&D Tax Credit is one of the most significant tax incentives available.
Over the years, the R&D tax credit legislation has become better defined and more inclusive. Many things are included now that weren't included originally. The tax credits are available for more than just research in a laboratory or new patented products. They apply to processes and methods that are new to a company, but not necessarily new to the industry. This gives businesses more possibilities for claiming this credit.
Here are examples of things that may be eligible for R&D tax credits. See your CPA or R&D tax credit specialists (like Tax Point Advisors) for details on whether you can claim your specific deductions or not.
It is often difficult to determine the true cost of R&D because of the way the project accounting systems are set up. Many companies do not capture the costs for the projects that include personnel, contractor fees, direct support or high-level personnel who work on the research project. It can be quite beneficial to have an experienced, highly qualified third-party (like Tax Point Advisors) hold technical interviews and find documentation that supports claims for federal and state R&D Tax Credits. Only a third of eligible companies claim this deduction because of the fear of an audit. With proper documentation, there is nothing to fear. Tax Point Advisors has industry-leading audit success, having never had a tax credit refused under audit.