With the U.S. Federal tax deadline extensions, there’s no excuse for qualified businesses not to claim their R&D Tax Credit.
The mass disruptions and unpredictability of COVID-19 have thrown us all for a loop. Consequently, businesses of all sizes desperately seek tax relief and revenue saving opportunities. Unfortunately, the final tax deadlines are upon us, but PMBA is still working with many clients to identify potential savings. So, what does this mean for your start-up or SMB? More time to determine your eligibility and file for the federal R&D Tax Credit!
It’s common for businesses to overlook or forget this valuable credit. And regrettably, the longer you neglect it, the less you will be able to amend. (Note: software companies, architects & engineers, manufacturers, and jewelry designers are the most common to miss out.)
Does my business qualify?
R&D Tax Credits are accessible for qualified research and development activities conducted:
- U.S. Federal Level; and
- U.S. Multi-State Levels (40+ states offer an incentive)
The program allows:
- Eligible SMBs (i.e., $50 million or less in gross receipts) to claim the credit against the Alternative Minimum Tax for tax years beginning after December 31, 2015; and
- Eligible startups (i.e., those with less than $5 million in gross receipts and earning revenue for less than 5 years) to claim up to $250,000 of the credit against the company’s federal payroll tax for tax years beginning after December 31, 2015.
Qualified start-ups must complete this process:
- Conduct an R&D Tax Credit Study to obtain a sustainable tax return position
- File Form 6765 with 2019 tax return
- File Form 8974 along with your next Form 941
Moreover, several high-tech start-ups can qualify for this credit, including digital marketing companies, SaaS companies, information service providers, gaming platforms, and many others.
To sum up, don’t miss this valuable opportunity to save revenue.