What is the Research and Development Tax Credit (R&D tax credit)?
The Research and Development Tax Credit (R&D) is a tax credit for businesses of all sizes who conduct R&D in the United States. The R&D tax credit can be extended to a wide range of business and industries that exceeds far beyond scientists and research labs.
The R&D tax credit was created to incentivize US-based research and development activity. Each year more and more companies take advantage of the R&D tax credit. Additionally, in 2015, the Protecting Americans from Tax Hikes (PATH) Act, made the R&D tax credits permanent, while also extending the benefit to startups.
What are the Potential Benefits of the R&D Tax Credit?
The R&D tax credits claimed by a qualifying company can potentially contribute to significant cost savings. These benefits include:
In credits claimed
Qualifying for the R&D Tax Credit
Many people used to think R&D tax credits only applied to those that wear lab coats or create new best-in-class products. This is not the case – R&D credit is much more expansive and far-reaching than most people realize.
Companies of all sizes and across many industries meet the federal government’s test for qualified innovation activities and can claim Research and Development (R&D) Tax Credits. However, many companies are not aware they qualify. There are thousands of companies that are leaving money on the table and not taking advantage of significant federal and state R&D tax credits.
The activities that qualify for the R&D tax credit are the same ones driving growth in your business.
Studies completed
How Do I Claim the R&D Tax Credit?
On average, companies are typically able to claim 7-10% of their qualified expenses as a federal R&D tax credit. For example, a single software developer, engineer, or lab technician who receives a W2 of $100,000 a year may generate a tax savings of up to $10,000.
The expenses that qualify for research activities within your company typically include employee compensation, materials, and contracted services. Various forms of documentation are sufficient to support your qualified expenses and may include payroll records, financial records showing supply or contract research expenses, and vendor invoices.
The Source Advisors Approach to R&D Tax Credits
With our consultative approach to the research and development tax credit, we invest time understanding each client’s history, current business direction, and future growth objectives. Each year we re-evaluate a company’s ability to accept the tax credit and provide on-going recommendations to improve the R&D tax credits process. We proudly support a recurring service to more than 92% of our clients.
Your Title Goes Here
Your content goes here. Edit or remove this text inline or in the module Content settings. You can also style every aspect of this content in the module Design settings and even apply custom CSS to this text in the module Advanced settings.
No Cost Feasibility Analysis
Understanding the Usability of the Credit Up-Front
Fixed Fees Include Audit Support
Dedicated R&D Team
Comprehensive Documentation Support
Tax credit experience
R&D Tax Credit State Benefits Available
Most states offer R&D credits to offset state tax liabilities. We’ll guide you through variations in State and Federal R&D tax credit rules, evaluating any states in which you qualify for and state-specific filing requirements.
SEE IF YOUR STATE OFFERS
R&D TAX CREDIT
CLICK ON ANY STATE TO KNOW MORE
Click on any state to know more
Illinois R&D Tax Credit Summary
NAME
Research & Development Credit
& PASS THROUGHS?
DESCRIPTION
Nonrefundable credit with similar definitions as federal for Qualified Research Expenses and Qualified Research Activities except only include Illinois-based expenses.
PERCENTAGE
6.5% on incremental expenses over the average of the three prior years.
THE SOURCE ADVISORS R&D TAX CREDIT STUDY PROCESS:
R&D Credit Estimate
Proposal & Engagement
Field Work & Credit Calculation
Documentation
Audit Support