Research & Development (R&D) Tax Credits

Research and development (R&D) credits are tax breaks provided by the government to encourage innovation and investment in new technologies and processes. These credits can be used to reduce the amount of taxes a business pays on its income and can be a great way to reduce costs.

R&D credits are available to any company that is engaged in research and development activities. This can include activities such as developing new products, services, or processes; improving existing products, services, or processes; or using existing products, services, or processes in innovative ways. Generally, the credit is based on the amount of money a business spends on R&D activities, up to a certain limit. In addition to this, any labor/payroll costs should be tracked appropriately as there is a potential for claiming credits related to these costs as well.

When claiming R&D credits, it is important to accurately document all research and development activities. The government has specific guidelines as to what qualifies as R&D, and businesses must provide adequate evidence of their activities to claim the credit. Our partners at KBKG are masters at R&D studies for complicated R&D cases and they developed the short “four-part” test summary in image below.

carpe digits the four part test kbkg

If you are looking for a more simplified version of applying for R&D, start with Gusto R&D partner link to learn more about these credits and how together we can help you save you today!

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