Take Advantage of the R&D Tax Credit
1st Capital Financial’s R&D Credit Filing Service allows businesses to offset their tax liability for day-to-day activities. Start your R&D credit application online to find out if you’re eligible.
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Claim the R&D Tax Credit, with None of the Headache
We’ll take care of the heavy lifting to assure your business maximizes its federal and state tax incentive while sparing you time and frustration.
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R&D Tax Credit Overview
What is the R&D Tax Credit?
The Research and Development (R&D) Credit rewards businesses for developing or improving their products, services, and processes. It amounts to a dollar-for-dollar reduction of their tax liability based on qualified expenses — including supplies, equipment, wages, and third-party services.
At A Glance
At A Glance
R&D Tax Credit Eligibility
Who Is Eligible for the R&D Tax Credit?
How to Claim Your R&D Tax Credit
Our R&D Tax Credit Application Process
R&D Tax Credit Calculator
Discover Your Potential R&D Tax Credit Value
R&D Tax Credit FAQs
Frequently Asked Questions, Answered
Are there state-level R&D tax credits?
Yes, there are currently 38 states that recognize the R&D tax credit. These states typically follow the IRS’s guidelines on qualified research expenditures (QREs) — with some exceptions. Fortunately, state R&D tax credits may be combined with federal R&D tax credits. When you work with us, we consider state and federal tax incentives during initial discovery.
How much money can you recover from the R&D tax credit?
There is no cap on the amount your business can claim in R&D tax credits. Since R&D tax credits are determined by the size and scale of your business’s technical activities — the more you spend, the more you save. Most businesses recover about 10% of their qualified R&D tax credit expenditures.
What are some examples of technical activities that qualify for the R&D tax credit?
Examples of technical activities that qualify for the R&D tax credit include:
- Developing Consumer Products
- Developing Software or Mobile Applications
- Developing New Processes or Techniques to Manufacture Products
- Improve the Performance, Functionality, Quality, or Reliability of Existing Products
- Designing Prototypes
- Testing Competitors’ Products
- Conducting Research that Speeds Up Your Time-to-Market
- Implementing New Process Automations
- Implementing Process Improvements that Reduce Waste or Improve Efficiency
- Developing Formula Improvements for Food, Beverage, or Chemical Applications
- Creating Patentable Products or Processes
What expenditures qualify for the R&D tax credit?
Examples of expenditures that qualify for the R&D tax credit include:
- Employee Wages
- Consultants’ Fees
- Material Costs
- Cloud Storage Subscriptions for Testing Environments
Note that expenditures must be related to research projects conducted in the US. Expenditures made in foreign countries do not qualify.
How is the R&D tax credit monetized?
The R&D tax credit is generally used to offset federal income taxes. If the credit is not fully utilized the year it is generated, businesses may carry it back one year for a tax refund. If excess credit is still available, businesses may carry it forward up to 20 years. Startups that are not yet profitable may apply the credit toward federal payroll taxes to offset up to $500,000 each year for up to five years (a total of $2.5 million).
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Find Out If You're Eligible for the R&D Tax Credit
Start your R&D credit application online to find out if you’re eligible, or contact sales to learn more.