The Research & Development tax credit can enable businesses to increase cash flow and savings, reduce the Federal income tax rate, and receive Federal and State dollar-for-dollar income tax reductions. Specifically, a wide variety of businesses can potentially offset up to $500,000 in payroll tax liability for qualifying activities.
As a small business owner, you know how important it is tostay on top of your finances and take advantage of every opportunity tomaximize your tax savings. One often overlooked tax credit is the R&D taxcredit, which can provide significant benefits to businesses that engage inresearch and development activities.
R&D tax credits are available for small businesses. Also known as the Research & Development tax credit, small businesses could potentially offset up to$500,000 in payroll tax liability for qualifying activities (even those companies that are not yet profitable). Expenses that can be potentially offset with this federal tax credit include employee wages, paying contractors, purchasing supplies, and many other costs. If you have a small business that performs research and/or technology development activities, you can claim an R&D tax credit. The R&D tax credit can then be applied to offset payroll tax or income tax.