Donna Genie breaks down the R&D tax credit: you qualify if you develop new or improved products or processes for your company. The credit covers US wages, supplies, and equipment at roughly 7-10% of qualified expenses, and you can amend returns up to three years back to claim refunds.
Questions this video answers
Donna Genie; uploaded August 10, 2021.
Roughly 7–10% of qualified expenses (wages, subcontract labor, supplies).
Contractor/subcontractor dollars are reduced — only up to 65% of their dollars count in the calculation.
All qualifying activities/costs must be based on U.S. dollars and U.S. workers (wages and subcontract labor in the U.S.).
You can amend returns up to three years backwards to claim refunds for the R&D credit.
Chapters
Are you innovating things and creating new processes that involve new technology and new ways of doing things? If so, you may qualify for the research and development credit. Now this is a pretty complex credit, but we'll narrow it down. Let's talk about what it's for and who it's useful for. Sometimes it's useful for businesses that don't even realize there is such a credit. And it doesn't seem so obvious. First off, you want to make sure that you are developing a new and improved process or procedure. It doesn't have to be new to the world, just new to your organization. So experimenting with alternative designs, resolving technical uncertainty and making sure that the process is developed to do things in a better way than it was before. Now, it doesn't necessarily have to mean you're a chemist or that you are engineering a new world or creating a mathematical process and formula. It just means that you have to be innovating a product or a procedure. You also have to make sure that you are the one who maintains the rights of ownership to that process and procedure. So you can't just pay somebody else to do that for you. They would be the one eligible for that credit. So in the R and D credit, everything in that credit has to be based on US Dollars and workers. So if you outsource some of this information or utilize technology across the lines outside the country, that qualification does not count. You must have wages in the US for labor that's in the US and or subcontract labor that is in the US to qualify. Here you can also utilize things like supplies, mach machinery, things that you may have to buy to innovate, or even subscriptions to products or services that help you innovate a process. So let me give you a little example. We are an accounting firm. Guess what? We qualify because we are doing work that is specific to innovating how people do financial accounting and how the advisory process works. So we're actually working on our own R and D credit here. So how much could this mean for you? Well, generally, if we take take all of those expenses of wages, subcontract labor and the supplies, the credit can be between 7 to 10% of that dollar amount. Now contractors, we reduce it, it's only up to 65% of their dollars, but wages in total qualify in that calculation. So a little bit of a complex calculation. It's not a do it yourselfer project, but we have some very streamlined ways to help you take advantage of the R and D credit. If, if you have questions about if you qualify. I'd love to hear from you. Please shoot me an email and we'll check it out and see how much we can get for you. And by the way, you can amend your return to up to three years backwards to qualify and get refunds on this credit. So good luck and let me know if you need some help and we'll help you get some money that you deserve if you qualify for the RD credit. Sam.
