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.
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.
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.
As of January 1, 2016, eligible small businesses ($50 million or less in gross receipts), can now claim the credit against alternative minimum tax ("AMT").
Furthermore eligible startup companies (those with less than $5 million in gross receipts and earning revenue for less than 5 years) can claim up to $250,000 of the credit against the company’s payroll taxes.
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