With the continued requirement to amortize 2024 R&E expenditures, more companies are finding themselves in a position to pay income taxes. This is primarily because NOLs incurred after December 31, 2017, are subject to an 80% taxable income limitation. To minimize the cash tax impact of federal income tax payments, R&D Tax Credit studies should be considered.
The Research & Development (R&D) Tax Credit is broad and applies to many industries. Taxpayers do not need to be engaged primarily in R&D to qualify, nor do they need to be in a positive tax position (recent changes allow for “start-up” businesses to monetize the R&D Tax Credit via a payroll tax offset).
You may benefit from the R&D Tax Credit if you answer “yes” to any of the following questions:
- Are you seeking to develop a new or improved functionality, performance, reliability or quality for a product, process, computer software, technique formula or invention?
- Do you have technical-type employees (e.g., engineers, scientists, researchers, CAD technicians, developers, etc.) creating/improving upon products or process or developing software in the United States?
- Do you incur U.S.-based contractor payments, supplies, or cloud computing expenses (AWS, Google Cloud, etc.) for creating products or developing software in the United States?
- Do you pay income taxes or was your business incorporated within the past five years?
If you answered “yes” or maybe to any of the questions above, it may be time to speak with Withum’s R&D Tax Credit Services Team to discuss your individual business needs and start planning as year-end approaches.
2024 Year-End Tax Planning Resources
Now’s the time to review your year-end tax planning options and strategies for the 2024 tax season. Withum’s Year-End Tax Planning Resource Center offers tips, legislative updates, and tax-saving opportunities for individuals and businesses.
Contact Us
Reach out to Withum’s R&D Tax Credit Services Team to discuss your individual business needs as year-end approaches.
Disclaimer: No action should be taken without advice from a member of Withum’s Tax Services Team because tax law changes frequently, which can have a significant impact on this guide and your specific planning possibilities.
