R&D Tax Credit

The Research and Development Tax Credit is a federal benefit that was established in 1981 that provides cash savings to companies that develop and design new products or processes. It was introduced to encourage companies to retain technical, high-paying jobs in the United States. Due to its name, many businesses mistakenly assume that this credit only applies to enterprises that produce cutting-edge technology, but its scope is far more widespread than that. Any business that creates or improves a product or manufacturing process likely qualifies for this tax credit. This includes incremental improvements to products that already exist. Many eligible companies miss out on the opportunity to claim the credit.

Our team will work with you to determine if you qualify for this credit based on the “Four Part Test” that Congress has outlined, detailed as follows:

1. Permitted Purpose: Activities were performed to develop a new or improved product or process. This could relate to a product or process’ functionality, performance, quality, reliability, and/or reducing expenses.

2. Technological in nature: ​The process used to discover the information must rely on the principles of a hard science (e.g. Computer Science, Engineering, Chemistry, Biology).

3. Eliminate technical uncertainty: The activities performed with a goal of discovering data that would eliminate uncertainty relating to capability, methodology, or appropriate design of the product or process.

4. Process of experimentation: The process used must have involved evaluating alternatives to overcome the technical uncertainties defined above, such as the scientific method which is similar to software’s development process.