RESEARCH & DEVELOPMENT TAX CREDIT

Don't be surprised... you may qualify! You could potentially have a 5 or 6-figure credit available for your organization. Average tax credit is $50,000 for every $1M in annual payroll.

IT PAYS TO BE INNOVATIVE

 

Every day, your business is taking a risk. Whether you’re researching a new drug, creating a mobile app, refining a mold or building a skyscraper, you’re doing more than just running a business. You’re taking a leap of faith that doesn’t guarantee you’ll get paid for your hard work. That’s why the Research & Development (R&D) tax credit exists.

 

Taking advantage of tax credits can be a full-time job. Revcon Solutions has partnered with GMG to provide businesses with an actual credit on the taxes they pay. R&D is one of the most valuable credits available because it is a dollar-for-dollar reduction in tax liability. There are no caps, no application fees, no restrictions on how you can use your credit dollars.

 

The R&D tax credit only applies to activities that the IRS considers “research and development,” which is more prevalent than you might think. Laboratories and high technology firms are obvious candidates, but did you know that architectural, engineering, software, wineries, breweries and many manufacturing companies are also eligible?

Due to numerous modifications and expansions over the years, more companies than ever before can benefit from this valuable incentive.

HOW MUCH IS THE R&D TAX CREDIT WORTH?

The size of the R&D tax credit varies greatly because it depends on the amount of R&D activity that can be quantified. An analysis of our client base shows that the average size of the federal R&D tax credit in one year is approximately 1% of a company’s annual revenues. However, credits can be claimed retroactively for up to three years and 36 states provide an additional R&D credit. 

THE FOUR PART TEST

Detailed Analysis Of Your Business

Determining whether a business activity qualifies for R&D is based on a broad set of definitions known as “The Four Part Test.” This is a subjective analysis that is open to interpretation, which is why so many different types of businesses qualify for the R&D tax credit. It is our job to substantiate, document and prove that some portion of your business activity involves R&D.

New or Improved Business Component

Permitted purposes include improvements to:

  • Function

  • Reliability

  • Significant cost reduction

  • Performance

  • Quality

Elimination of Uncertainty

  • Undertake activity to discover information

  • Eliminate technical uncertainty concerning the capability or method for developing or improving a product or process

Technological in Nature

Discover information that relies on principles of:

  • Physical sciences

  • Engineering, chemistry, biology, metallurgy, computer science

  • Time-Motion studies / Scientific management

Process of Experimentation

  • Evaluate alternatives

  • Develop and test hypothesis

  • Refine or discard the hypothesis

  • Technical Risk: Failure may occur

QUALIFIED RESEARCH EXPENSE (QRE)

Basic Units Of R&D Tax Credit

The QRE is the basic unit of the R&D tax credit. QREs are derived from salaries, supplies and contractor expenses. About 80 percent of the tax credit you receive comes from salaries. As a part of the R&D tax credit study process, we determine whether an activity counts towards R&D, the employees involved with that activity, the amount you pay them and the portion of their time that is dedicated to that activity. That’s why payroll data is essential to proper calculation of QRE.

QUALIFYING ACTIVITIES

Including but not limited to:

  • Designing the process to fabricate the metal to reduce shrinkage and increase its quality

  • Programming CNC machines

  • 3D CAD Engineering with programs like SolidWorks

  • Developing and testing of prototypes

  • Quality assurance – First-piece quality inspections

  • Designing and developing of specialty tooling and fixtures

  • Considering alternative metals to develop the product

  • Considering different metal thicknesses

  • Developing engineering drawings

  • Developing weld procedures

  • Bending of metal (e.g. sheet metal) has to consider the stressing and stretching

  • Considering strength of final product for application (meets specifications)

OUR METHODOLOGY

Revcon utilizes a team of highly qualified professionals including IP attorneys with engineering backgrounds and adhere to the comprehensive project by project approach methodology as required by the IRS. By following this methodology, we qualify every applicable employee, activity, hours spent and corresponding wage period to maximize the incentive for our clients.

 

To date, we have had zero disallowances and have produced engineering studies in all 50 states, serving our clients in multiple disciplines including: Cost Segregation, Research & Development Credits, WOTC Hiring Credits, and Property Tax Appeals. Already claiming a credit? Our experts can review your credits and documentation to evaluate opportunities to optimize your claims and audit process.

ACTIVATE TODAY

Contact us today! We will provide you with a no-cost preliminary analysis and facilitate a discussion with you and your CPA or tax professional to determine if you qualify for the R&D Tax Credit. 

Determine My Eligibility

Our average client experiences over $4,000 in savings, per employee. Click below to self-identify and determine what programs you qualify for, as well as quantify the potential amount we can secure for you.

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