One way your company can save thousands yearly… The Research and Development Tax Credit.
2020 has been a devastating year for businesses across the United States. Companies have had to furlough employees, reduce spending, and take on loans to stay afloat during these unprecedented times. However, one-way businesses can recover lost profits is through the Research and Development Tax Credit.
When many business owners hear "Research and Development," they automatically think that they do not qualify. Self-censorship is the main reason why 95% of companies that do qualify for the Research and Development Tax Credit do not apply for it. Business owners often assume that their CPA would bring something like this to them when, in reality, they are unaware of this niche tax code. At Medical Incentive Advisors, we have been recovering credits for companies who improve or update internal business processes, pay for research supplies, and or pay licensing costs for software to conduct experiments, among many other Qualifying Research Activities. Please see the bullets below for some examples of just a few ways businesses can qualify.
Qualifying Research Activities:
Rental or lease costs of equipment
Wages paid to employees or 1099 contract
Supplies used and consumed in the R&D process
Contract research expenses paid to a third party for performing qualified Research Activities (up to 65%)
Basic research payments made to qualified education institutions and various scientific research organizations, (allowed at 75% of the actual cost incurred)
Changes in any processes or procedures
And so much more!
Now that you have an idea of what is recoverable let's go into how you can recover your credits. There are three methods in which your company can recover profits from overpaid taxes based on the IRS's guidelines.
Traditional - Method - 20% of the current year qualified research expenses)
Alternative - Simplified Crediting Method (ASC) - 14% of the current year qualified research expenses
Startup Provision
The most popular method chosen by businesses is the Alternative Simplified Crediting method. This is also the one that Medical Incentive Advisors operates under. MIA's team of accountants use the ASC method because it keeps us well within the IRS safe harbor zone of audit.
Time and time again, we have business owners who think they do not qualify end up receiving a Credit Projection Report for tens of thousands in dollar for dollar credits. Now is the time to act if you haven't already filed your taxes for 2019 as we can still recover credits from 2016, 17, and 18. A concise estimate of what you will be getting back is entirely cost-free, so contact us today! If you would like to learn more about the Research and Development Tax Credit history, you can click here. You can also click here to learn more about how we mitigate the risk of audits and protect our work in the unlikely event of one. At Medical Incentive Advisors, we have worked with clients across the medical industry to recover over $3 million in overpaid taxes since the start of the Covid-19 crisis. Our process of recovering your credits is streamlined and straightforward for you and your business. If you are interested in proceeding further with the Research and Development Tax Credit, you contact us via the form submission system. We look forward to working with you and your company!
