The research and development (R&D) tax credit is a tax incentive offered to companies who engage in research and experimental activities in the U.S. and incur qualified research expenditures (QRE).
R&D tax credits deliver a dollar-for-dollar reduction of your tax liability. In other words, R&D tax credits provide a revenue source for your business without requiring you to sell additional products or provide more services.
Qualified R&D activities are defined as research and experimental activities prior to commercial production. The expenses incurred during these qualified R&D activities are considered QRE for purposes of the tax credit. Qualified R&D activities expenditures may include employee and independent contractor wages.
CTI helps your company analyze the Development Lifecycle in order to accurately capture every single qualified R&D activity in the development process. In general, the types of QREs include:
Phase One: 1 to 2 weeks
In Phase One, the CTI team obtains better understanding of your company’s operations and businesses by reviewing company data and interviewing key financial and technical personnel about their departments’ R&D activities.
In this phase, CTI will:
Phase Two: 8 to 10 weeks
R&D Tax Credit Study
In Phase Two, our R&D specialists perform a comprehensive and detailed analysis of your company’s R&D activities, quantify QRE, create federal and state R&D tax credit calculations and develop and organize the supporting R&D work papers.
In this phase, CTI will:
Phase Three: Timeline varies
Phase Three is a critical step in the development of an overall and efficient process of securing and maximizing the R&D tax credit. CTI helps companies contemporaneously develop internal processes to better capture and document their R&D expenses and help defend R&D claims during IRS and State Taxing Authority examinations.
R&D tax credits are among the most misunderstood tax incentives today, resulting in too many businesses leaving available money on the table. The below resources help to shed light on the R&D tax credit and how your business may be rewarded significant tax savings for your research and/or experimentation.
R&D Tax Credit Calculator
All businesses that perform research and development activities in the U.S. qualify for the R&D tax credit. Quickly estimate your company’s benefit by filling out the fields below:
Ready to discover your business activities that qualify for R&D tax credits? Click here to connect with a Tax Navigator at CTI and receive a free, 30-minute consultation.
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