The eldest have figured out mom and dad, they’re tuned into the good school teachers and the bad, they’ve navigated crushes and heartbreaks - they have the experience. The junior kin trust the oldest to show them the way.
Clients foster a similar trust for their CPAs and accountants. Clients see their CPAs as experienced advisors who will not lead them astray. They trust their CPAs to provide income tax return preparation and compliance services.
Clients also look to them for money-saving strategies – such as the many federal and state tax credits and incentives afforded to U.S businesses.
The research and development (R&D) tax credit is one such tax-saving opportunity. However, CPAs are sometimes uncertain about which activities qualify and thus remain apprehensive about determining their client's eligibility.
When you’re feeling unsure, ask these questions to help identify R&D tax credit eligibility for your clients:
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But the questions don’t end there. What about the start-up companies on your client list? Even if they currently fall into an income tax-loss position, there may be other opportunities for them to capture credits.
Beginning in 2016, start-ups can use federal R&D tax credits to offset their employer-paid payroll taxes (i.e., 6.2% FICA tax).
Here are two questions you should address for your start-ups:
If your start-up company answers yes to both questions, then their eligibility chances look good for the payroll tax offset credit. But time is of the essence since they need to elect the payroll tax offset option on an originally filed federal tax return (including extension).
With these proactive steps, CPAs and accountants can provide additional tax savings opportunities for their clients utilizing these valuable R&D tax credits. When appropriate, CPAs should reach out to R&D tax credit specialists to ensure your client captures the maximum credits possible.