Research & Development Tax CreditsThe IRS estimates that only 10% of companies that qualify for the credit actually take advantage of its benefits.

Many business owners today participate in research and development activities that may qualify them for the Research and Development (R&D) tax credit and they don't even know it. 

The Research & Development tax credit is a cash incentive for small to large companies, ranging in size, to help offset the cost of research and development activities. This is one way that the government supports manufacturing innovation in the United States in order to remain competitive in today's global market. 

Saltmarsh is one of the few firms in the United States to offer two methodologies in determining your claim. We also will help you document your claim so you can have an audit defensible claim. Since a credit can be applied for all open tax years (usually the 3 preceding tax years), we can help you calculate and document your claim and file amended tax returns in order to get the credits you deserve.

Furthermore, we take a proactive approach to calculating your credit for the current year. Where most R&D consultants come in after year end to determine your credit, we work with our clients continuously throughout the year to document your claims as you go and qualify projects on a quarterly basis so no projects are missed. We find this to be a preferable method with the IRS and, additionally, could result in a higher claim for your business.

Who Qualifies For The Credit?

Any company that develops, designs or improves products, processes, formulas, techniques, inventions or software can be eligible for the credit. Typically, small companies overlook research and development because they do not have a lab or scientists. Research and development can come from engineers, software developers, factory workers, tooling workers and a variety of other tasks performed in daily business.

A wage-based credit is also available to offset supply costs and contracted labor. This credit is a general business credit and a dollar-for-dollar reduction in the tax liability for the company. It is also available for flow-through entities such as S-Corporations and Partnerships and would directly reduce the individual owner’s tax expense.

Four Basic Requirements

  1. Qualified research activities are defined as, "the development or improvement of a business component (defined as a process, technique, product, invention, formula or software)."
  2. The research must be technological in nature and must rely on the physical or biological sciences, engineering or computer sciences.
  3. The research must be intended to eliminate uncertainty in the development or improvement of the business component.
  4. Elimination of technical uncertainty must be accomplished through a process of experimentation, including trial and error, simulation or modeling. Failure before success in the research is not a requirement in this area.

Eligible Industries

  • Aerospace and Defense
  • Agriculture
  • Architectural and Engineering
  • Biotech
  • Manufacturing, including but not limited to Chemical, Boat, Computers, Electronics, Electrical Equipment and Components, Medical Devices, Plastics, Rubber and Transportation Equipment, Signs
  • Construction
  • Dental Labs
  • Design-Build Manufacturing
  • Metal Fabricating and Casting
  • Oil and Gas
  • Pharmaceutical
  • Software Development
  • Tool and Die

Qualifying Activities

  • Designing New, Improved or More Reliable Products, Processes or Formulas
  • Designing New Products (For the Company’s Use, Not Consumers/Customers)
  • Designing Tools, Molds, Jigs and Dies
  • Developing and Applying for Patents
  • Certification Testing
  • New Concepts and Technology
  • Improving Manufacturing and/or Production Processes (Includes Incorporation of New Equipment in the Process)
  • Building New Manufacturing Plants

Saltmarsh CPA - Who We Are

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Saltmarsh CPA - What We Do

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FORT WALTON BEACH
(850) 243-6713

ORLANDO
(407) 203-8990

ST. PETERSBURG
(727) 821-9200

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(850) 435-8300

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(813) 287-1111

info@saltmarshcpa.com
(800) 477-7458

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