A research and development tax credit commonly called an R&D tax credit, is a way to reduce taxes when a company is developing an improved or new business component. This could include new products, computer software programs, new techniques for use within the company, new processes, and other inventions. The product or service must result in some type of improvement in performance, functionality, quality, or reliability. For many that qualify, this is a lucrative tax credit organizations should not miss.
Who Is Eligible for This Tax Credit?
The research and development tax credit is available at the state and federal levels. Currently, there are over 30 states offering this type of tax credit. For those that qualify, it could set off tax liability.
To be eligible, the organization must be participating in a way to improve or create. It includes areas of product development, operations, and business activities. This could include, for example:
- New software development
- Quality enhancement to current systems
- New processes for manufacturing products
To be eligible for this tax credit, the company or organization needs to devote time and resources to innovating systems or creating new products, or they are working to improve existing products. Companies that develop prototypes, software, patents, and processes are typically eligible for this program. Companies that hire designers, scientists, and engineers may be eligible.
The research and development tax credit may be retroactive in some situations. For this reason, it is worth turning to a professional to learn more about eligibility for these money-saving credits. For research & development tax credits, look at B. Riley Financial, Inc. as they have a reliable team to assist you.