As a manufacturing company, at some point or another, you’ve dedicated resources to research and development whether you realize it or not. There are several activities that could qualify as research and development including:
- Attempting to advance technology in a well-defined way
- Finding a new approach when, despite your expertise, the approach was not obvious
- Resolving one or more technological uncertainties
- Performing experimental work involving one or more versions to develop a new or improved product or process
- Doing something that hadn’t been done before
- Due to solutions not being available, you…
- performed experiments;
- carried out theoretical calculations;
- applied computer-based modeling to help resolve one or more technological uncertainties;
- or performed experimental validation of computer-based model results.
If your company has participated in any of the above actions and has not taken advantage of R&D Tax Credits, you could be leaving a considerable amount of tax dollars unclaimed. In the US, companies in the manufacturing and technology sector are claiming approximately $15 billion in tax credits a year; however, most businesses that are eligible aren’t realizing the credit. The most prominent reason why companies exclude themselves from applying for R&D tax credits is due to the misconception that R&D is limited to the invention of new products, laboratory research, and successful developments.
Examples of qualifying research activities include the following:
- Engineering and designing a new product
- Research aimed at discovering new technical knowledge
- Evaluating and designing product alternatives
- Significantly modifying the design of an existing product
- Designing, constructing and testing preproduction prototypes and models
- Engineering activity to advance a product’s design to the point of manufacture
- Integration of equipment into a fabrication process
- Experimenting with new materials to improve existing products
- Evaluating new methods for improving performance, reliability, quality, and durability
- Developing new production processes during prototyping and preproduction phases
- Research aimed to significantly cut a product’s time-to-market
- Research aimed to obtain more efficient designs
- Developing an internal-use software system for collecting production data
- Attempt but fail in the development of a new product or fabrication process
Why should your business conduct an R&D Tax Study now?
The longer you wait, the longer you are missing out on valuable tax dollars. A qualifying business can redeem the credit for all open tax years (generally the last three) and the credits have the potential to carry forward up to 20 years.
Working with R&D Tax Experts is the best way to realize your R&D Tax Credits. Our trusted firms’ technical and financial services teams work independently and in conjunction with your case and deliver the final calculations directly to your tax preparer.