R&D Tax Credit

Research and Development Tax Credits Research and Development (R&D) Tax Credits are often misunderstood by both tax practitioners and business owners. Yes, the technology industry is a clear beneficiary, but many other industries can benefit as well. Companies that not only develop but improve products or processes can take advantage of R&D tax credits. For example, if your company has made their products faster, more cost effective or more durable, the costs associated may be eligible not only for federal R&D tax credits, but state credits. Such process improvements as those that result in better quality or more environmentally friendly production may also meet the qualifications for R&D tax credits.

How Your Company Benefits   To the extent most companies are identifying R&D expenditure, they may be opting to amortize over 60 months or even writing off the expense over 10 years. Why? In some cases the company may not be aware it can deduct certain R&D expenses in the current year or, if they neglected to claim eligible credits in past years, they may not be aware that they might be able to file an amended return for all open years (three years back, plus current year).

In other cases, companies may be aware of R&D tax credits, but may not believe their expenses are significant enough or are wary of claiming unqualified activities.

Who Is Eligible   Many industries can take advantage of the R&D tax credit, including:

  • Technology/Software Development
  • Health Care/Life Sciences
  • Professional Services
  • Manufacturing, including chemical production, consumer products and industrial equipment
  • Construction/Building Equipment Installation
  • Food & Beverage/Food Sciences
  • Automotive
  • Agriculture
  • Engineering, including energy efficiency and design improvement
  • Retail

How Miller Cooper Can Help   Our Specialty Tax Solutions group has performed more than 100 R&D studies over the past decade. They will research your production and processes to identify eligible R&D activities and provide the detailed documentation to take advantage of R&D Tax Credits on both the federal and state level in a customizable report.