Congress established the research credit in order to encourage businesses to increase R&D spending in the United States. The research credit provides a cash benefit for many types of qualifying activities, including activities outside the normal realm of R&D. Crowe Horwath LLP has a proven methodology for helping companies get more out of every dollar spent by claiming the research credit.
Crowe’s research credit group is a highly skilled team of tax professionals with a wealth of research credit and project management experience to serve your particular needs.
A research credit study performed by Crowe tax professionals generally includes:
- Identification of qualifying R&D activities;
- Documentation of those activities; and
- Calculation of both federal and state research credits.
Benefits of a Study
The research credit provides a federal tax benefit in the form of a nonrefundable credit against income tax. The research credit may be carried back one year and carried forward 20 years. For many companies, the research credit can yield a significant reduction in effective tax rate. For prior open tax years, the research credit may be claimed on an amended return, many times providing significant cash refunds. Many states allow a research credit; however, the type and magnitude of credit varies by state. Crowe’s research credit study provides an analysis of available state research credits, maximizing your company’s benefit from R&D expenditures.
Types of Qualifying Activities
The following are types of activities that may qualify for the research credit:
- New product development;
- New process development; and
- Significant improvements to existing products or processes.
Applicable Industries
Any company in any industry can claim the research credit. Through experience in providing research credit studies, Crowe has found that companies in the manufacturing, health sciences, and biotechnology industries are especially likely to benefit from the credit.
