Possible Implications of the R&D Tax Credit Transition Period Extension

R&D Tax Credit


small business

Deborah Roth, CPA
June 18, 2023

The IRS has granted taxpayers an extended transition period to perfect their refund claims for R&D Tax Credits. Originally set at 30 days until January 10, 2023, the transition period now allows 45 days until January 10, 2024, to refine claims. This extension gives businesses more time to ensure accurate and well-supported claims, maximizing their chances of securing valuable tax benefits. Documentation and supporting evidence are essential for successful R&D claims. Seize this opportunity to drive innovation and growth through the R&D tax credit.

Essential Details Needed for Filing an R&D Tax Credit Claim

Essential Information for Claiming an R&D Tax Credit Refund

To successfully claim a refund for the Section 41 R&D tax credit, taxpayers must provide the following details:

  • Identify the business components related to the R&D credit for the tax year.
  • Specify the qualified research activities conducted, including the individuals involved and their objectives.
  • Provide the total expenses incurred for qualified employee wages, qualified supplies, and qualified contract research during the claim year.
  • To submit an R&D tax credit claim, taxpayers should attach IRS Form 6765 (Credit for Increasing Research Activities) and a statement containing the required information to their amended tax return.

Positive Outcomes of Claiming the R&D Tax Credit

Claiming the R&D tax credit offers a range of advantages, such as:

  • Enhanced cash flow and substantial savings.
  • Reduction of your Federal tax rate.
  • Dollar-for-dollar income tax reduction at both the Federal and State levels
  • Eligibility to claim the credit for open tax years up to three years ago

By taking advantage of the R&D tax credit, businesses can enjoy increased cash flow, reduced tax burdens, and the opportunity to retroactively claim the credit for previous tax years. Explore the potential benefits and maximize your savings through the R&D tax credit program.

Requirements for Businesses to Seek the R&D Tax Credit

Your business may be eligible for the R&D tax credit if it incurs expenses in the following areas:

  • Compensation for employees or contractors engaged in qualified research activities
  • Consumption of supplies during the development process
  • Utilization of cloud computing services associated with development operations
  • It's essential to note that qualified research extends beyond traditional notions, encompassing a wide range of activities beyond chemistry and laboratory settings. Ensure your business explores the possibilities and considers claiming the R&D tax credit for eligible expenditures

Seek Assistance from Proficient Advisors

We specialize in understanding and applying the precise R&D tax credit regulations tailored to your unique circumstances. Our team will navigate you through the filing requirements seamlessly.

If you require support in filing a Research Credit refund claim or claiming the Credit on your current tax year return, don't hesitate to reach out to us for professional assistance.

In conclusion, GOAT.tax stands as a game-changing platform and a prominent tax consulting firm with over four decades of R&D tax credit experience. Our cutting-edge automated software and skilled team are what truly set us apart from the rest. Now is the ideal time to review your R&D activities and leverage the R&D tax credit, irrespective of your industry. Don't miss out on potential tax savings that can be reinvested in your business and drive your next major project forward. Seek our assistance with Form 6765 today and unlock the full potential of your company's growth and success.

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