AndreTaxCo, PLLC

Architecture Firms 

 

Many architecture businesses are often unaware of whether they qualify for certain government tax incentive programs, or they may believe that such programs do not apply to architecture companies. Even those that are aware often fail to capture the full extent of tax credits to which they are entitled.

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For example, many taxpayers mistakenly believe only educated and professionally licensed architects and engineers designing completely innovative and/or uniquely revolutionary buildings and structures are qualified research activities to claim the R&D tax credit under the U.S. tax code. However, this is not true. Other collaborative employees and expenses outside of traditional architects may qualify for the R&D tax credit.

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If your architecture practice performs any of the following (see examples below) there may be an opportunity your company could benefit from an R&D Tax Credit study.

• Designing improved systems (e.g. heating, ventilation, and air conditioning (HVAC))

• Designing new and/or unique drainage systems and flare stations

• Designing for environmental sustainability, including environmental impact technical studies

• Designing spatial requirements to improve facility scale and/or output 

• Designing protocol systems (e.g. control, energy consumption, telecommunication, security, protection)

• Designing performance and/or quality development testing 

• Developing improved construction and/or build techniques (e.g. sustainability concerns, pollution control, and waste treatment)

• Developing unique and/or improved designs, material selection, techniques, and processes 

• Developing enhanced efficiency processes (e.g. extraction and treatment systems)

• Developing electrical systems and electrical retrofits

• Developing or improving facilities (filtration systems, spatial design constraints, electrical components and integration)

• Developing unique projects and techniques regarding environmental factors (e.g. structural requirements and/or conditions)

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Below outlines various federal tax incentives which may be applicable to your business as a cash saving benefit and/or refund opportunity. If any of these credits appear relevant to your business, let AndreTaxCo help you claim the credits that you deserve!

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Research and Development Credits 

• Research Credit (Form 6765) under IRC § 41(a) 

  • See also State R&D Credits for additional benefit opportunities

  • "Start-up" Payroll Tax R&D Credit Offset

  • University Basic​ Research Credit

  • Energy Consortium Research Credit

  • Architecture Services Industry – Qualifying Research Activities Examples​ 

    • Architecture & Engineering

    • Construction / Precast Concrete

    • Information Technology & Telecommunications

    • Software Development

    • Other Industry Activities

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Building Renovation & Modification (Disability Access) Credit & Incentives

• Rehabilitation Credit (IRC § 47) – renovation of qualified rehabilitation building(s) (e.g. historical properties) credit;

• Disabled Access Credit (Form 8826) under IRC § 44(a) in the case of an eligible small business (as defined in IRC § 44(b)) 

  • ​See also "Barrier Removal Tax Deduction" pursuant to IRC § 190

    • ​The Architectural Barrier Removal Tax Deduction encourages businesses of any size to remove architectural and transportation barriers to the mobility of persons with disabilities and the elderly. Businesses may claim a deduction of up to $15,000 a year for qualified expenses for items that normally must be capitalized.

    • Businesses claim the deduction by listing it as a separate expense on their income tax return. Also, businesses may use the Disabled Tax Credit and the architectural/transportation tax deduction together in the same tax year, if the expenses meet the requirements of both sections.

    • To use both, the deduction is equal to the difference between the total expenditures and the amount of the credit claimed.

    • See IRS Publication 535 (2018); 26 U.S. Code § 190 (expenditures to remove architectural and transportation barriers to the handicapped and elderly).

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Hiring Credits & Incentives

• Work Opportunity Credit (Form 5884) under IRC § 51(a) 

• Differential Wage Payment Credit (Form 8932) determined under IRC § 45P(a) 

• Indian Employment Credit (Form 8845) as determined under IRC § 45A(a) 

• Empowerment Zone Employment Credit (Form 8844) determined under IRC § 1396(a)

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Low-Income / Targeted Geographical Zone Credits

• Low-Income Housing Credit (Form 8586) under IRC § 42(a) ​

• New Markets Tax Credit (Form 8874) determined under IRC § 45D(a)

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Business Benefit Plan Credits

• Small Employer Health Insurance Credit (Form 8941) determined under IRC § 45R – available for tax years beginning after 2009. For tax years beginning after 2013, the credit is only available for a 2-consecutive-tax-year credit period.

• Paid Family and Medical Leave Credit (Form 8994) determined under IRC § 45S(a) in the case of an eligible employer (as defined in IRC § 45S(c)) 

• Credit for Small Employer Pension Plan Startup Costs (Form 8881) determined under IRC § 45E(a) in the case of an eligible employer (as defined in IRC § 45E(c)) – up to $5,000 per year for up to three years ($15,000 cap)

• Credit for Employer-Provided Childcare Facilities and Services (Form 8882) determined under IRC § 45F(a) 

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Note, many of these listed federal credit incentives have comparable state tax incentives that are often substantially similar to calculate or claim, subject to state specific procedural rules and regulations.

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