The R&D Tax Credit incentivizes taxpayers who design, develop or improve products, processes, techniques, formulas or software to promote research and spur job growth in the United States.
So, why haven't you been utilizing the Credit? Simple, the R&D credit is known to be a complex credit with extensive variables. If you are not using a specialist for this credit, the amount of your credit and its validity can vary greatly, as well as the documentation to support the Qualified Research Expenses (QREs).
Over expenditures increased 966% since 1970 and 195% since 2000
The R&D Credit is now permanent and has structural improvements.
The credit benefits a huge range of items, including products, processes, techniques, software, formulas, inventions, etc.
The subjective test is low, enabling most companies to qualify. See Four Part Test.
R&D Credit Benefits
Pre-Modeled: InnovaTax models the credit before beginning.
Advantages: Perfecting a credit is far easier than creating one from scratch.
No Questionnaires: We develop the credit from existing material, we do not require employees to fill massive forms.
Powerful: Tax credits are the most powerful tax tools, reducing tax dollar-for-dollar with no ceiling.
Dynamic: Credits do not just impact one year, they can be carried back one year and forward twenty.
Potent: The R&D Credit reduces tax up to 9.1% net (14% Gross) of costs, and states increase that further, frequently as much as 50%, though variable.
More Flexible: The R&D Credit can now take tax to zero (companies under $50 mil/year).
Small Business Friendly: For startups, the credit can now be applied to payroll tax up to $250K (under $5 mil/year).
The Four Part Test §41
The business component is that Product, Process, Formula, Invention, or Technique that is sold or leased. The work on a business component must be developed for a permitted purpose such as to increase reliability, functionality, performance, or quality.
The activity performed must rely on the principles of Physical or Biological Science, Engineering or Computer Science.
Process of Experimentation
Evaluate process capable of identifying and evaluating more than one alternative to achieve a result. This may include modeling, simulation, or a systematic trial and error methodology.
Elimination of Uncertainty (§174)
The activity must be intended to discover information to eliminate uncertainty concerning the capability, method, or ultimate design for developing or improving a product or process.
R&D Credit System
Patterns: Identifying key criteria exposes qualified activity.
Flexible: Diverse technical / accounting documents can be integrated.
Repeated: Once developed, the system will continually generate answer.
Interface: Customizable Graphic User Interface (GUI).
Tailored: Each client has a website tailored to their specific R&D Credit.
Powerful: Simple but effective tools capable of capturing and integrating millions of lines of data.