Research and Experimentation Tax Credit Studies
Since 2006 Hoyman Dobson has helped us reduce our taxes by approximately $310,000. Much of the savings were generated through effective tax planning, including conducting Research Credit Studies, a process which requires high focus, competence and knowledge. The savings generated through the studies were quite remarkable.
Mitzie Norman, Accounting Manager
DTx, Inc.
August 2010
For more information contact: Barbara Oswalt, Tax & Business Valuation Director. Email or call 321-426-3010.
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The purpose of the research and experimentation tax credit is to encourage companies to increase domestic research and experimentation. Nowadays, most recent tax regulations are more lenient towards the definition of qualified research activities. So even if you were not eligible in the past, you may now be able to benefit of this federal tax credit.
So how do you know if your company may qualify for research and experimentation tax credit studies? Does your company:
- Design new products
- Improve existing products
- Improve manufacturing processes through technology
- Develop new formulas or techniques
- Improve customer part designs to improve manufacturability
- Design tools, fixtures, molds, or dies
- Develop prototypes or models (including computer generated models)
- Apply for patents
- Test new concepts or technology
- Implement robotics or production control software
- Streamline or improve production or manufacturing processes to achieve higher standards in quality and productivity
- Perform certification testing
- Expend resources on outside consultants or contractors to conduct any of the above-stated activities
If you checked any of these activities your company may qualify for Research and Experimentation Tax Credit.
In addition to benefiting by deducting the research expenditures, your company can also claim the research and experimentation credit.
In order to successfully complete a research and experimentation credit study, your company should use a project based or cost center accounting system. While the accounting records will track qualified expenses, your company will also need to maintain records with information on the nature of the research, such as marketing materials, bid packages, patent applications, management reports, engineering drawings.
We can assist you in determining the credit as well as helping you to design systems to capture the necessary information.
The Research and Experimentation tax credit is a general business credit - it is a reduction of your tax. This tax credit is available to all entities filling a federal tax return. Will you take advantage of it?