R&D tax credits? They can save your business a lot of money…if you meet the four-part requirements. Hear insights about:
- What R&D tax credits are, what qualifications the IRS expects a business to meet to qualify, and how R&D tax credits can help agency owners pay less in taxes
- What four tests your R&D expenses must pass to qualify, and why the technological test is a crucial bar to pass
- What sorts of R&D projects and initiatives would qualify for R&D tax credits, such as website redesign or AI implementation
- How customizing an off-the-shelf marketing database for internal use does count as an R&D expense that would qualify for these tax credits
- Geoff shares other example activities that would qualify as eligible R&D expenses that would meet IRS requirements
- How 42 of the 50 states also offer state R&D tax credits, with varying and individual state requirements
- Why checking your business activities against the four-part test is the first important step for getting started claiming eligible expenses as tax credits
- Why market research does not meet the technological requirement and so would not be an eligible expense
R&D Tax Credits
There are lots of ways your agency can save money on taxes, and too often agency owners leave money on the table for the IRS just because they aren’t aware of their options. R&D tax credits can be huge potential tax savings, but you have to meet a four-point list of requirements to qualify. However, there are many types of qualifying expenses that meet the requirement threshold and you might be surprised at the tax savings you’re missing out on by not taking advantage of R&D tax credits.
In this week’s episode of the Progressive Agency podcast, expert Geoffrey Kimmel from Engineered Tax Services discusses these four key requirements and shares the many varied types of R&D that can qualify for R&D tax credits. If you’re looking to claim every credit and deduction available to you to minimize your tax liability, this episode explains a key type of credit you won’t want to overlook.
The Four Requirements for Claiming R&D Tax Credits
As Geoff explained during our discussion, the IRS wants you to meet four key requirements for any R&D tax credits you wish to claim. To qualify for these credits, the expense you’re claiming must:
- Improve a component of your business
- Be technical in nature (website, internal use software, etc.)
- Involve research that eliminates some degree of uncertainty (testing, etc.)
- Involve “trial and error” to model the activity and evaluate its effectiveness
In other words, a website redesign would meet these requirements, for example. It involves improving a component of your business, it meets the technical standard, it involves research and the elimination of uncertainty, and it involves trial and error, tweaking and adjusting.
As Geoff explained, the technological bar is the main one you need to be certain to clear. Something like market research wouldn’t qualify, even if it involved the use of technology, because the technology isn’t the focus of the improvements.
If you think some of your business expenses might qualify for R&D tax credits, the first step is to check against those four key requirements. Of course, working with an experienced tax professional can help you ensure that you’re meeting the threshold for qualification, so talk to your tax advisor if you aren’t certain.
To learn more about Geoff Kimmel and his team at Engineered Tax Services, you can visit their website at https://engineeredtaxservices.com/ or reach out to Geoff directly at firstname.lastname@example.org. And, as always, please visit me at https://craigcodyandcompany.com/podcast/ for more informative, money-saving podcast episodes like this one.
How to Connect with Geoffrey Kimmel:
- Call Geoff: (609) 915-1607
- Email Geoff: email@example.com
- Website: https://engineeredtaxservices.com/
- LinkedIn: www.linkedin.com/in/geoffkimmel
- LinkedIn: www.linkedin.com/company/engineered-tax-services
- Facebook: www.facebook.com/engineeredtax/
- Twitter: @EngineeredTax
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- Website: www.craigcodyandcompany.com
- Twitter: @CraigC2742
- LinkedIn: https://www.linkedin.com/in/craigcodycpa
About Geoffrey Kimmel:
Geoffrey Kimmel has an extensive financial services background including service in the specialty tax, commercial banking, and insurance industries. Since 2010, he has consulted heavily with ETS clients to identify, qualify, and capture tax benefits. Prior assignments included managing Treasury Management consulting teams serving clients ranging from Small Business to Fortune 500 companies designing and delivering custom-developed operational, systems and process improvement solutions. He has personally consulted with American Express, US Air, Comcast and Merrill Lynch as well as numerous firms ranging from small business to Fortune 500. As CFO and Board Member for a regional bank, he managed all bank operations and financial activities. He was part of a select team that redesigned all treasury practices for the City and County of Denver. Geoff is a frequent speaker at industry events, with individual and firm wide CEU and CPE sessions on a variety of topics.
Geoff holds graduate and undergraduate degrees from Drexel University.