Understanding R & D Tax Credits

The R & D tax credits are available for companies that are developing new or improved business components. This may include formulas, products, computer software, processes, inventions, or techniques that lead to improved or new quality, performance, reliability, or functionality. R & D tax credits can offset tax liability on a state and federal level.

Determining Eligibility

Eligibility is much easier to achieve than many business owners may realize. R & D tax credits apply not only to the development of products but also to operations and activities, such as quality enhancements, software development, and new manufacturing processes. In addition, start-up companies may be eligible as well to apply for the credit against payroll for up to five years.

There are a number of different activities that could ensure your company’s eligibility. For example:

  • Devoting resources and time to the creation of innovative or new products
  • Improving existing products
  • Developing software, patents, processes, or prototypes
  • Hiring scientists, engineers, or designers

R & D tax credits may also be retroactive. Depending on when you filed your tax return, you may be eligible for R & D tax credits for the past three years. Loss companies may even qualify to go even further back with retroactive claims.

The Benefits of R & D Tax Credits

R & D tax credits provide dollar-for-dollar savings that will directly reduce the tax liability of your company. There is no limit on the credits and expenses that you can claim every year.

If you want to learn more about R & D tax credits, we are here to help at B. Riley Financial, Inc. For more details, visit us now.

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