R&D Tax Credit

The Research & Experimentation (R&D) Tax Credit has a storied history that began in 1981 as the Economic Recovery Tax Act. It was made to ease the tax burdens of companies that were doing research, and has been so integral to our system that it was factored permanently into the government spending bill in 2015.

This tax credit has proven invaluable for a plethora of businesses throughout the years, saving companies hundreds or thousands of dollars as they perform research and experimentation that takes place anywhere from life science laboratories to the production floor.

Do I Qualify for the R&D Tax Credit?

There are countless companies that don’t utilize the R&D tax credit, just because they’re not certain if they qualify for it. In order to determine if you are eligible for the R&D tax credit, you must determine:

    • Does what you’re doing qualify as research?
    • How would you utilize the credit?
    • Do you have documentation that supports your research?

Answering these questions will provide insight into whether or not you qualify, and get you much closer to claiming an integral credit that can ease tax liabilities. Eligibility is simpler than businesses tend to think, as a company must only meet two requirements: a) they must have less than five million dollars in gross receipts and b) they must have no more than five years of gross receipts.

But My Company Doesn’t Specialize in R&D

When some companies hear “R&D,” they assume they must be in the sciences—but you don’t have to have a research laboratory in order to qualify for the R&D tax credit. Companies that run field research or manage test kitchens—or even utilize wineries and distilleries—can claim the R&D tax credit. It is an open definition that includes all manner of experimentation.

Do you want to find out if you qualify? Contact our experts at Atherton & Associates, LLP for more information.