There’s no limit to these yearly Tax Credits; so you’ll get 10% of everything spent on R&D back.
But when December 31st passes, each business yet to claim their R&D Tax Credits will lose access to another year of eligible refunds. To avoid losing out and get all you’re owed, take the following tax credit tips to heart:
1. You Most Likely Do Plenty R&D Already
Did you know companies that aren’t R&D focused—or who don’t even have a dedicated R&D department—can still get R&D Tax Credits?
Qualifying R&D activities are more common than most expect. From spending in test kitchens to manufacturing floors, whether internal or customer-facing, if spending has upgrade-intention it counts as R&D. Even worker salaries and supplies can be included.
Best of All: R&D activities don’t have to innovate your industry to count for credits, or even bring successful results. They just need to be for advancements to your business.
2. Some of Your R&D Returns Probably Expired
Have you been in business for over 3 years, but have yet to claim R&D Tax Credits? If so, we’re sorry to be the ones to say it: You’ve missed out on money.
While R&D credits can be claimed 3 years back, the end of every calendar year is a cut-off date for any spending prior to that time.
But at Least: While R&D Tax Credits only reach back 3-years, they carry on for 20 more. Act now to ensure R&D credits you can claim, but can’t use yet, don’t get left behind.
3. Your CPA Won’t Tell You About This
Did your Certified Public Accountant (CPA) tell you about the hefty R&D Tax Credit you’re eligible for? Didn’t think so.
CPAs have a bad habit of not speaking on good opportunities like this if they aren’t capable of filing for it themselves. The same goes for countless other Tax Credits too.
Expect CPA Oversight: Smart CPAs will keep you from filing tax errors, but don’t expect them to point you to all the lucrative Tax Credits they aren’t prepared to chase down.
4. Not All States Give You More (But Most Do)
Do you live in a state that encourages R&D? If you’re lucky enough to find yourself in one of the 36 that do, there’s more money to gain.
All U.S. businesses can get 10% of their R&D spending back. However, some states offer additional credits that can dramatically increase your returns. The specifics vary by location.
Some State Examples: California offers 15% for all R&D activity, Arizona gives 24% for your first $2.5 million spent and 15% forward, while Louisiana gives 30% for R&D if done in-state.
5. Start-Ups Have More Credits to Claim
Is your business considered a start-up? If so, you can also use R&D Tax Credit benefits to offset your payroll taxes by up to $500,000 for up to five fiscal years.
The U.S. Government has a vested interest in the success of local start-ups, so in addition to their 10% refund for R&D activity they can file for even greater returns.
Double from 2022: The previous limit ($250,000) was multiplied from 2023 as part of Congress’ Inflation reduction act, giving start-ups massive R&D Tax Credit opportunity.
6. Tax Strategists Bring Your Best Solutions
Tax code complexity is the top driver behind all the credits businesses tend to miss. From hours lost, to accidental overpayments and CPA oversight—tax complexity is an easy drain on your business.
In 2022 over 6 billion hours went to navigating tax compliance alone—and that’s before error fixes. (More than 50% of tax filing had mistakes according to the U.S. Government Accountability Office).
Better Options Exist: It’s easy to make mistakes when filing for R&D Tax Credits, and nobody wants unwanted IRS scrutiny. But tax strategists are experts at obtaining every credit you’re due through flawless filing. They’ll not only get your past three years of R&D refunds, but each future return too.
