What is the R&D tax credit and how does it work?
The R&D credit is a permanent credit and computed annually, providing a nice annuity for the company taking advantage of the credit. The R&D tax credit can be determined for the current year as well as other open tax years. A 2016 law change now allows the credit to offset Alternative Minimum Tax for companies with less than $50M in revenue—making the R&D credit more beneficial than ever.
How do I qualify for the R&D tax credit?
When performing design services for customers, the terms of the agreement between the contractor and its customer are important since R&D credits are only eligible for the party that bears the economic risk of the design efforts. As a result, R&D credits are more likely to qualify for work performed on fixed price or lump sum types of projects.
What is our process?
What information is needed to claim the credit?
In phase 2, contemporaneous documentation is collected to support the qualified activities. The company will generally provide the following types of documents: project charters, power point presentations, design documents, emails discussing technical challenges, drawing iterations, or test reports to support their R&D activities. Our process utilizes the documents the company already generates and adds additional support through the interview process.
Contact your Eide Bailly professional, visit www.eidebailly.com and request a feasibility call, or contact Joe Stoddard, CPA, Director of R&D Tax Credits at firstname.lastname@example.org or 801.456.5915 to learn more about the R&D Tax Incentives.