Many businesses are unaware they qualify for R&D tax credits. You may be eligible if your company engages in activities such as:
• Developing or improving products
• Designing custom solutions
• Experimenting with new materials
• Updating manufacturing processes
• Conducting technical feasibility testing
• Performance enhancements
Claiming R&D tax credits requires careful documentation and compliance with Internal Revenue Code regulations, but the potential financial benefits make the effort worthwhile.
Although Form 6765, Credit for Increasing Research Activities, is the official filing form, the key to a successful claim lies in accurately identifying and thoroughly documenting qualified expenses. Supporting materials such as financial records, project documentation, technical reports, and even oral statements can help substantiate your claim by showing how the costs directly relate to eligible R&D activities.
The R&D tax credit is directly applied to your tax liability on your corporate tax return, reducing the amount of tax you owe. When the credit is claimed on a timely filed return, the benefit is factored into your final tax calculation, so there’s no need to wait for a separate IRS refund. However, if the credit is claimed through an amended return, processing typically takes between six (6) and nine (9) months.
Importantly, a company does not need to have employees in order to claim and benefit from the R&D tax credit. Employee wages are just one (1) type of qualified expense that can generate an R&D tax credit. Other eligible expenses include supplies and materials, costs paid to outside contractors, and even cloud computing expenses.
CPAs are trained to have broad, general knowledge of tax matters, enabling them to handle a wide range of client situations on a daily basis. However, the R&D tax credit is unique among tax incentives, it requires specialized expertise and nuanced interpretation of complex and sometimes ambiguous sections of the tax code. As a result, it’s not uncommon for CPAs to refer clients to specialized consultants or dedicated R&D credit calculation platforms.
Yes. Qualified small businesses (less than $5M in gross receipts and less than 5 years old) can apply the credit toward payroll taxes instead of income tax liability.
Yes. You can file amended returns to claim the credit retroactively for up to three prior tax years (depending on your statute of limitations).
Payments to U.S.-based contractors who perform qualified research activities can be included in the credit, though typically only 65% of the eligible cost is allowed.
Yes, both internal-use and customer-facing software development can qualify, provided the development meets the IRS’s Four-Part Test and involves technical uncertainty and experimentation.
Yes. Over 35 states offer their own version of the R&D tax credit. These vary by state and may require separate documentation or forms.
Possibly. Many businesses overlook the credit due to misconceptions or lack of awareness. Working with a specialist can help you determine if you’re eligible and how much you may have left unclaimed.
Here are some additional frequently asked questions (FAQs) about the R&D tax credit
Nevada Operations
9440 W. Sahara Ave • Suite 245
Las Vegas, NV 89117
© 2025 Spectre One Management LLC
