R&D Tax Credit Benefits: Cash Savings Opportunities

What are the Benefits of Performing an R&D Tax Credit Study?

If you qualify for this credit, your company may have access to cash refunds from previously filed federal and/or state income tax returns, or you may be able to reduce current or future tax liabilities (e.g. payroll taxes) through imminent cash saving opportunities.

AndreTaxCo can help you fully capture all qualified activities and eligible expenses pursuant to applicable tax codes, regulations, case law interpretations, and IRS / state taxing authority publications. AndreTaxCo can also assist with the required contemporaneous documentation gathering, preparation, and organization in support of the credit claim as provided under IRC § 41.

AndreTaxCo may also provide tax and procedural memorandum to help you further understand how to claim the credit, successful documentation strategies and recommendations unique to your business and industry, and how to properly track and identify future research and development tax credits as a future cash savings benefit. Our final deliverable (e.g. calculation excel models, tax form preparation and/or filings, technical tax memos, "business component" narratives) and services can be tailored and customized based on your business needs and situation.

R&D Credit Opportunity

  • Often overlooked and provides immediate cash saving and/or refund opportunity for many small and mid-size companies.

  • Helps significantly reduce current and future years federal and state tax liabilities.

  • The R&D tax credit is a dollar-for-dollar credit against taxes owed or taxes paid (not a deduction). Taxpayer may be able to currently deduct all such qualifying R&D costs in the year incurred in addition to claiming the credit.

  • Billions in federal and state R&D tax credit benefits are generally given out annually to both businesses and/or shareholders.

  • Approximately 80% of R&D credit claims are made by only a few of the largest companies in the U.S., while many eligible small businesses fail to claim their equally deserving portions of these government incentives.

  • Whether you or your business has historically (or currently) been paying income taxes or not (in losses), your company may potentially be eligible for an R&D tax credit to be utilized (e.g. eligible "start-up" may offset payroll taxes with R&D credits), or state R&D tax credit refund opportunities.

  • Business may claim the credit for all open tax years (generally the last three or four years plus the current year).

  • Additional years may be available if the taxpayer is in a net operating loss (NOL) or alternative minimum tax (AMT) position.

  • Federal tax credits may carry forward 20 years.

  • Recent tax laws are taxpayer-friendly and bring additional benefits.

Benefits of Using AndreTaxCo to Perform Your R&D Credit Study

In general, by using AndreTaxCo to perform your R&D credit study, you will enjoy the following benefits that make the research and development credits even more valuable:

  • AndreTaxCo generally charges fixed fees and offers flexible engagement agreements.

  • AndreTaxCo provides audit defense and support.

  • AndreTaxCo provides a preliminary analysis of the potential benefits and costs at no charge.

  • AndreTaxCo provides our clients with a methodology of capturing future credits/incentives by offering you tools, checklists, recommendations, etc.

  • AndreTaxCo is available on-site, or virtually depending on your resource availability and business needs, when performing our studies. AndreTaxCo understands the importance of avoiding unnecessary burdens for its clients.

  • AndreTaxCo has expertise with performing and defending R&D studies across a wide range of industries and technical tax issues.

Benefits of the R&D tax credit?

(1) Startup Business Benefit(s) - Current & Future Cash Savings and/or Refunds

Since its first enactment in the early 1980's, the R&D tax credit is specifically designed to help all businesses finance research and development initiatives, create U.S. jobs, and bolster the U.S. economy. Recently, new amendments and laws supporting the R&D credit specifically provide additional benefits for small and startup businesses. For example, eligible startup companies with annual gross receipts with less than $5 million for the tax year and no gross receipts prior to the five taxable years ending in the relevant tax year can apply up to $250,000 of the R&D credit against payroll tax liability as an immediate benefit regardless of company profitability.

(2) Increase Company Market Value & Bottom Line

Because the R&D tax credit reduce your company’s federal and state tax liabilities, it may also be reported on your financial statements as an asset and increase your company’s market value. This increased market value may support your company's ability to receiving additional funding, increase its purchase price when evaluating potential exit options, or improve share price. The cash savings resulting from the credit can also be carried forward and reinvested in further R&D initiatives, further generating company growth and cash flow.

(3) Promote Innovation & Market Competitiveness

Investing in creating and/or improving new or existing products and/or services through technical activities, and those in direct support, can help transform your business into a more competitive, higher margin, and forward thinking business. The R&D credit can help improve your company's products, processes, technology, and software while also simultaneously help grow your business into a more efficient, higher profit yielding business.

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