Take Advantage of the R&D Tax Credit
1st Capital Financial’s Research and Development (R&D) Credit Filing Service allows businesses to offset their tax liability for day to day activities. Submit a R&D credit application online to find out if you’re eligible.
No Upfront Cost or Commitment ¹
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.
R&D Tax Credit Basics
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
R&D tax credits are available to any businesses that incur Qualified Research Expenditures (QREs) while operating in the US. The IRS has defined a four-part test to help businesses determine whether they are eligible, and state R&D credit programs generally follow the IRS’s guidance.
At A Glance
R&D Tax Credit Eligibility
Who Is Eligible for the R&D Tax Credit?
R&D Tax Credit Filing Process
How Claiming the R&D Tax Credit Works
Initiate Discovery Process
We conduct a full analysis of your business’s operations to identify research projects that can be claimed toward the R&D tax credit.
Interview and Substantiate
We interview personnel and work with your CPA and accounting staff to gather expense-related data and documentation.
Review and File Claim
We complete our calculations and substantiations, finalize an executive report, and work with your team to assure your claim is filed smoothly.
Maximize Benefit Each Year
We partner with our clients to identify other tax incentives and share procedural recommendations to help maximize their benefit each year.
R&D Tax Credit Calculator
Discover Your Potential R&D Tax Credit Value
R&D Tax Credit FAQs
Frequently Asked Questions, Answered
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.
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.
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
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.
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).
Having trouble finding the answer to a question? Give us a call at +1 (833) 317-8227.