The passing of the COVID-relief package titled the ‘Consolidated Appropriations Act, 2021‘ (“CAA 2021”) extended the §45L Energy Efficient Home Credit (§45L Credit) through December 31, 2021 and made permanent the §179D Energy Efficient Commercial Building Deduction (§179D Deduction). These two valuable tax incentives encourage energy efficient design in both residential and commercial construction.
By now everyone has most likely seen that President Trump finally signed the second covid relief bill (Consolidated Appropriations Act or “CAA”) and passed it into law. While this is obviously good news for millions of Americans during this pandemic, this new law has HUGE implications to corporate 2020 R & D tax credit study.
There are many intriguing tax provisions which appear in year-end coronavirus relief bill, which was just passed by Congress and enacted into law with the President’s signature.
There are so many misunderstandings about what is required to qualify for R&D tax credits that it is a wonder anyone applies for the R&D tax credit. These misunderstandings are far more critical than the misunderstanding you had with your wife when she used hot sauce instead of BBQ sauce on your ribs. This misunderstanding costs companies thousands of dollars in lost cash that they need for their businesses. The myths abound. One frequently circulated myth is that a company must increase its research in order to qualify for the R&D tax credits again the next year. This is far from the truth. Questions about qualifications need to be asked to an experienced tax credit consultant like Tax Point Advisors in order to not make a mistake with your tax credits or to miss an opportunity for one of the most lucrative tax incentives out there.
The state of New Jersey allows a qualified business enterprise to claim a state R&D tax credit for these qualified research expenses.
If you are, you are not alone. Many companies in the U.S. are afraid to claim the R&D tax credits that are truly theirs because they don't want the hassle and expense of an audit. According to the IRS, only about 10% of eligible companies claim the R&D tax credits. That's a sad statistic considering how lucrative these tax credits are, and how businesses need cash during these hard economic times. This low number of taxpayers claiming their R&D tax credits falls in two categories -- they don't know about them, or they are afraid they will get denied in an IRS audit. The R&D tax credits are one of the most lucrative credits available to businesses.
With all the drama and complexities of 2020, the closing months of the year are at least starting to show some light of clarity and new beginnings. From the announcement of potential lifesaving vaccines to, of all things, new announcements for the deductibility of Payroll Protection Plan funding, taxpayers now can sigh a little relief from a difficult year.
Massachusetts companies can now calculate their Massachusetts research credit using a new simplified method, opening up opportunities to companies that did not meet documentation requirements previously or were obligated to use the maximum amount of 16% per code section 830 CMR 63.38M.1(5)(a)1.
If you are a company with qualified research and development work, the R&D tax credits apply to you. These credits can make a lot of difference in your company's bottom line. They are some of the most lucrative tax credits available on both the federal and state levels. You can claim them even if you're unprofitable.
Many contractors do not realize the following activities related to system design and development may qualify them for R&D tax credit savings.