It is important for corporations to be aware of how their operations relate to the various tax provisions in place in order to make the most of the huge benefits to be accrued in cases where eligibility is certain. Federal Research and Development Tax Credit is one of the important tax credits in existence that business can take advantage of. It is a provision that is very critical in the advancement of technology, diversification of product lines, and the growth of business. It is the driving force behind the phenomenal growth experienced by the electronics industry and has been the catalyst in the development of new products and processes.
How It Works
The tax credit allows business to seek a dollar for dollar tax reduction for qualifying expenditures. The credits can be claimed for a period of up to 3 years retroactively. You can also defer claiming the credit for a period of up to 20 years. The reward that the company enjoys is not related to the final product at hand, but the aggregate variations, changes, and experiments undertaken to arrive at the product.
The tax credit first came into being in 1981. The recent extension occurred on the 3rd of April 2014 when the Senate Finance Committee passed the legislation extending the lives of numerous expired and expiring tax provisions.
What Are The Changes?
There have been several changes to the R & D Tax Credit rules over the years and the latest being those announced on the 2nd of June 2014. The latest changes are particularly unique in the way they represent a huge help for small businesses. Regulation TD 9666 allows companies to utilize the A.S.C (Research & Development Alternative Simplified Credit) on the amended returns. Innovative small to medium scale businesses can translate this change into more dollars in their pockets. Money which can make a world of a difference when it comes to the creation of new employment, keeps business running and cater for the expansion needs.
There are a number of professional companies that can help you with the compliance and submission of your tax returns to ensure that you get the best you can from this noble facility. Look for options online and ensure that you compare the reputations of the various tax services professionals.