Yes! You can claim the credit for all open tax years (typically 3 years).
What expenses qualify for the credit?
Wages, consumed supplies, contracted research, and cloud hosting expenses.
How do you decide what amount of wages qualify?
Qualifying wages are calculated by taking the gross wages from Box 1 of the W2 and multiplying it by the percent of time spent on R&D.
How do you know what activities are considered R&D?
To be considered R&D, activities need to pass the four part test. A new or improved business component, technological in nature, elimination of uncertainty, and process of experimentation. For specific examples, please see our industry page or contact us for a free consultation.
Can any size company claim the credit?
Yes! The R&D credit is easily accessible to small and mid-size companies. The credit itself has no bearing on the size of the company, and is based on salaries paid.
What expenses do not qualify?
a. General and Administrative Expenses
b. Rent Expense
c. Utility Expense
d. Advertising Expense
e. Market research
f. Commercial Production
g. Foreign Research undertaken outside of the US
h. Funded research
i. Duplication or adaptation of existing business components
j. Research related to social sciences, arts, or humanities
What documentation can be used to support my R&D claim?
The best documentation for a valid claim is contemporaneous documentation(documentation at the point the R&D was done). We advise and help all of our clients on creating documentation systems that best support the credit.
Other forms of support include:
Interviews with Employees and Management
Invoices and Receipts
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