Research and Development Tax Credits

In order to reward and drive innovation, the federal government offers an incentive through the Research and Development Tax Credit (R&D). Many companies are either unaware of this credit or fail to max out the credit’s potential. What companies may miss is qualifying expenses that don’t take place in traditional cost centers or costs associated with improving products or designs currently in place, as many associate R&D with only new products.

Examples of activities with qualifying expenses include:

• Improving or developing next generations to innovate products
• Custom Software Applications
• Replacing legacy telephone services with newer technology (such as VOIP)
• Improving product safety, quality or durability
• Developing custom communication networks for specific uses and layouts
• Testing materials and prototypes to increase product performance
• Designing cloud-based platforms
• Improving infrastructure for network security

The R&D credit is computed based on a percentage of qualifying expenses. Types of qualified expenses can include wages, contractor costs, equipment, materials and overhead.

Understanding the qualifications for this credit can be complex as well as documenting support for claiming the credit. At Maner Costerisan we have assisted many clients with claiming tax credits for research and development activities and have had many success stories. We believe you should be rewarded for your efforts to be innovative and would like to help, 517.323.7500.