• US R&E Tax Credits

What is US R&E Tax Credit?

The R&E tax credit is a federal wage-based tax credit available for the development or improvement of products, processes, techniques, formulas, inventions or software. In addition to qualified wages, companies may capture supply costs for prototypes, as well as 65% of contracted labor spent performing qualified research on behalf of the company. In addition, over 35 states have an R&E tax credit program as well.

What Qualifies?

  • Developing new technology, new , improved or more reliable products, processes or formulas
  • Developing prototypes or pilot models, new tools, molds or dies
  • Developing or applying for patents
  • Testing new product designs
  • Developing or improving production or manufacturing processes
  • Developing new software applications
  • Expending resources on outside consultants or contractors to do any of the above-stated activities

Basic Requirements

There are four basic requirements for research activities to qualify:

  • Qualified research activities are defined as the development or improvement to a business component, which is defined as a product, process, technique, formula, invention or software.
  • The research must be technological in nature. That is, the process of experimentation used to discover the information fundamentally relies upon the physical or biological sciences, engineering or computer science.
  • Furthermore, companies may use existing technologies and may rely upon existing principles to satisfy this requirement.
  • Their search must be intended to eliminate uncertainty concerning the development or improvement of a business component. Uncertainty exists if the capability or method for developing the business component is unknown, or if the appropriate design of the business component is unknown.
  • Elimination of the technical uncertainty must be accomplished through a simulation.

Who Qualifies?

The credit is available to any type of entity including partnerships, corporations (C or S), foreign-owned or start-ups.

The work has to be done in the US and the entity has to be taxable in the US.

The credit is non-refundable and can only be applied against taxes payable, any unused credits can be carried forward. For small companies including start-ups, the credit can be applied against payroll taxes up to $250,000.

Historically, start-ups that were not paying federal income taxes could claim R&D Tax Credits but would need to carry them forward until they could offset their income tax liabilities (i.e. when they became profitable). But as of 2015, small businesses could apply for the R&D tax credit against their payroll tax as well!

The new payroll tax offset is exclusively available to companies that have:

  • Gross receipts for five years or less
  • An average of $5 million in gross receipts or less within the last five years
  • Qualifying research activities and expenditures

Important to note:

The payroll tax offset may be available to new businesses and start-up companies for up to five years, any unused R&D credits that are not used to offset payroll taxes may be carried forward for up to 20 years and used when the business becomes profitable.

What can be claimed?

  • Salary and wages for employees such as engineers, managers, project managers
  • Supplies consumed in the R&D
  • Payments to US-based contractors
  • Computer leasing expenses

EVAMAX Deliverables:

  • We conduct technical interviews & identify what projects qualify in a consultative manner.
  • Organize documentation for the qualified projects
  • Prepare costing and the tax forms to quantify the expenditure for the qualified projects.
  • Follow up with the Government to check the status of the filing.
  • Either the Government approves the claim without an audit (happens 90% of the time for EVAMAX Clients). And money is released.
  • In case, the Government wants to conduct audits. EVAMAX prepares & defends the clients in these audits. And money is released after the audit.
  • With our size and infrastructure, we cater to clients located anywhere in the US.

EVAMAX Team Expertise:

EVAMAX is a team of highly qualified and experienced professionals in diverse fields of engineering and science, tax & finance. Our team is very effective and result oriented. We have been claiming unmatched success by maximizing the R&D Refunds for our clients.

EVAMAX SERVICE STANDARDS

  • Excellent internal controls and best practices to ensure program compliance, expediting and seamless client service experience. We apply the same philosophy for our client’s best practices improvement and tools for effective internal controls and documentation process, to maximize their benefits from the R&D Tax Credit programs.
  • Interviewing the client’s technical staff & identifying the qualifying activities and expenditures
  • Preparing tax schedules
  • Defend & prepare the client for technical & financial reviews
  • Track & Expedite your claim from Start to Finish.

We cater to clients located anywhere in the USA.

To schedule a no obligation consultation

CONTACT US

Learn More about the US R&E Program & How EVAMAX can help Maximize benefits through the program

How the R&E Tax Credit Is Calculated and Ways to Capture its costs

Supporting Documentation Needed for US R&E

FINANCIAL BENEFITS OF THE R&E TAX CREDIT PROGRAMS – CANADA & USA

For assistance in preparing your submission and to position your application for approval contact EVAMAX Group to help you with the process. You may also email us at info@evamax.com or call 1-877-711-7733.

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