Who is Eligible for R & D Tax Credits?
It’s getting close to tax time again and you may be wondering if your business qualifies for research and development tax credits. We at Texas R&D Tax Credit Solutions can help you determine if your company is entitled to these tax breaks. Below are some of the qualification guidelines for R & D tax credits.
Scientific/Medical Research and Development
If your company is involved in research that benefits the medical field, such as developing medical equipment, scientific research on disease, and the development of medicines or pharmaceuticals. This research is of great value to society, and you are definitely eligible for research and development tax credits.
Inventions and Prototypes
If your company has developed prototypes, new machines or materials, or software, you are eligible for the research and development tax credit. These require a great commitment of employee working hours and materials, and in order to help these businesses stay profitable, they are offered tax incentives so they can remain competitive.
Research and development tax credits may also be applied to any research into creating new processes or applications for ideas. For example, this could relate to business organization, medical or scientific processes that could be novel or reworked in an innovative manner. These ideas take time and money to test and refine, so they are generally covered under the scope of research and development activities.
All types of businesses also qualify for this credit. It doesn’t matter if you are an established company or a start up. If your company qualifies for any of the above research and development activities, you may be able to claim one of the following tax credits for your business.
Traditional Tax Credit
These tax credits are for established companies that have been in business for a long time, those which “became incorporated prior to January 1st, 1984 and had 3 or more tax years with qualified research expenditures and revenue between January 1st 1984 and December 31st 1988.”
Startup Business Tax Credit
These credits are aimed at young companies that are recent start ups and were “incorporated after December 31st, 1983 or had fewer than 3 years with qualified research expenditures and revenue between January 1st 1984 and December 31st, 1988.” These companies may need the extra support of these tax credits to keep them afloat—and to help them manage business expenses which may be overwhelming for a company in the first few years of operation.
Alternative Simplified Credit
Tax credits that fall under this category are “for companies that cannot adequately substantiate qualified research expenditures for Traditional or Start-Up credit calculation methods.” You may need a professional to determine your company’s status in this instance.
If your company has been involved in research and development in Texas—it doesn’t matter where you operate, be it in Austin, Dallas, Fort Worth, Houston or San Antonio—your company is entitled to tax credits. Contact Texas R&D Tax Credit Solutions to find out more information about your eligibility and how to claim the credits that will save your business a significant amount of money.