Effectiveness of Tax Credit for Research and Development
As tax season approaches, you may be thinking about how you can best maximize the efficiency of both your personal filing as well as any business-related filings, including research and development. Of course, if you are like a lot of people, you might not be thinking too far in advance about your tax filings—you might even be avoiding thinking about it! Gathering receipts and paperwork and trying to find as many tax credits as possible to take advantage of might not be how you like to spend your time; however, taking advantage of research and development tax credits, for one, can make a big impact on your business, and it can open up new opportunities for you going forward.
How Can a Research and Development Tax Credit Benefit You?
Some people are under the impression that the time and effort it takes to apply for a tax cre
dit isn’t worth the return. While it is true that you will have to keep track of certain expenditures and paperwork, it is definitely worth your time. If you or your business are involved in research and development, you could be eligible for a tax credit that may enable you to purchase better equipment, hire a research assistant, and invest more into the process. The better your research and development process, the better the outcome, so accessing that credit can be invaluable for your company.
What Can You Receive Credit For?
So how can you access the research and development tax credit? What parts of your work are eligible for claiming? There are several types of expenditures related to research and development that you can claim for tax credit. Your best bet is to talk to a financial expert who specializes in tax claims to help you fully understand the criteria—remember, these processes are always simpler when you are working with someone who has knowledge and expertise in the area. In the meantime, simply keep receipts and documentation related to any research and development expenditures. Keep track of any equipment purchased, services or fees paid for, specialists hired, paperwork or application fees paid, and any time you spend money on research and development. All of these items may be eligible for credit.
What Steps Do You Need to Take to Claim?
The first step in claiming research and development tax credits is to set up a free consultation with our team at Swanson Reed who can walk you through the process. Present them with your receipts and documentation, and from there, they will be able to advise you on what you can claim. Claims will be made as part of your normal tax filings.
You can also ask Swanson Reed about how TaxTrex could work for you. TaxTrex is a software system designed specifically to help companies substantiate their R&D tax credit claim through accurate data and documentation keeping. Research and development tax credits can free up capital to further invest into your company or venture and improve the outcome of your research and development.