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R&D tax credits, also known as the Research and Development credit, enable businesses to potentially receive a tax credit on qualified research expenditures that have been incurred within the state of Connecticut. Taxpayers might qualify for either the Incremental Credit or the Non-Incremental Credit if they paid for (or incurred) Qualified Research Expenses.
Qualified Research Activities in CT can include the below:
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Properly claiming the R&D tax credit can be difficult without the right expertise - That’s where GOAT.tax comes in. Our R&D tax credit software identifies any qualified research expenses your company paid and qualified research activities to ensure you receive the largest refund possible.
These qualified expenses typically include employee compensation, contracted services, and materials. Typical forms needed for proof often include payroll records, detailed financial records, and vendor invoices.
All companies in Connecticut (regardless of industry, size, or revenue) that perform these qualified research activities must satisfy the following criteria of the IRS Four-Part Test as outlined in IRC §41(d):
The Incremental tax credit can be carried forward up to 15 years for tax years on or after January 1, 2021. For tax years before January 1, 2021, the credit carryforward time period is unlimited.
The Non-Incremental tax credit can be carried forward up to 15 years.
For the Incremental Credit, multiply by 20% the excess of the research and experimental expenditures conducted within the state of CT during the current income year over the amount spent on expenses during the previous income year.
For the Non-Incremental Credit, Qualified Small Businesses can receive a tax credit equal to 6% of the R&D expenses. For other businesses claiming the Non-Incremental Credit, the calculation method will depend on total R&D expenses from that tax year.