Only a company with patents, or unique products, qualifies for R&D tax credits.
The tax code has been changed so that a company developing new products of processes, or improving existing ones, can qualify. Job shops of all kinds, which develop products to their customer’s specifications, typically qualify, too.
Only a company with staff in lab coats working with test tubes can qualify for R&D tax credits.
The tax code was changed to expand the definition of R&D from only laboratory science to sciences applied in the field. Many job shops, engineering service firms, and other companies now qualify.
Only a company with profits and a current tax liability should claim an R&D tax credit.
Even if a company has no tax liability now, Federal R&D credits can be carried forward for up to 20 years, for use in reducing future tax liability, and the credits can also be carried backward to some years. In addition, many states have R&D credits and some of these can be refunded even when the company has no state tax liability.
Only a company with Federal tax liability should claim an R&D tax credit.
About 40 states have state R&D tax credits, some with advantages not offered by the Federal R&D credit program, such as: ability to sell or transfer the credits, ability to get a state refund when the credit exceeds state tax liability, and, in some cases, credits which can be as much as four times the Federal amount.
Only big corporations can claim an R&D tax credit.
The U.S. Tax Code has been changed to make R&D credits more easily available to small and mid-size companies, and about 25% of all companies claiming the credit have assets under one million dollars.
A company manufacturing in China or elsewhere overseas can’t claim the R&D tax credit.
As long as the design work is done here in the US, manufacturing of this product can occur anywhere, whether the manufacturing is outsourced or the manufacturing company is your own.
The R&D credit won’t help cashflow or profits.
Unlike a tax deduction, an R&D tax credit is a dollar-for-dollar credit; this reduces a filer’s tax bill by a full dollar for each credit dollar. A six-figure tax credit – which most of our clients receive – increases Earnings After Tax by the full amount of the credit. A tax credit that can be used to reduce the taxes to be paid means that much more cash in the company’s bank account.
Every company claiming an R&D tax credit gets audited.
Tax Point Advisors’ audit rate is under 5%, and our industry-leading audit success is unmatched.
As a CPA firm, it’s better if I do R&D studies ‘in-house’, as I wouldn’t want to introduce a competing firm to my clients.
We only do R&D tax credit studies, in collaboration with CPA firms and their clients. We do not offer tax preparation, audit, or any other accounting services. And we only market our services to CPAs, working in collaboration with you in bringing R&D credit services to your clients. We are the only R&D tax credit study service provider dedicated to marketing exclusively to CPA firms. Unlike competitors, we will never call your clients without your advance permission.
