Georgia R&D Tax Credit Considered Most Taxpayer Friendly
Inception and Benefits
The R&D credit was introduced in 1981, which implemented many promising incentives for companies making R&D investment plans. However, with the government letting it expire 16 times over the last 35 years, it essentially became an unreliable source for companies depending on the tax credits. Congress finally decided to make it permanent in 2015 and included a couple positive incentives:
Start-up Companies:
- with less than $5 million in gross receipts
- in their first 5 years of business
Incentive:
- can offset the employer portion of FICA payroll tax (up to 250,000 each year)
Small Companies:
- with less than $50 million in average gross receipts
Incentive:
- can offset Alternative Minimum Tax
State R&D Credits
There are multiple states that have R&D tax credits, many of which may be more valuable than the federal R&D tax credit. Numerous companies often overlook their state R&D credit, not realizing how beneficial these may be. That being said, the Georgia R&D credit can be up to 10 percent of qualifying expenses, which may be a better benefit than the federal credit for some taxpayers. For those companies that don’t have any Georgia income tax liability, they may utilize the credit against Georgia payroll tax withholding. That could potentially be a significant sum of money the company can put back into their business.
Qualifying Activities and How to Take Advantage
Did you know that there are many activities that can qualify manufacturing companies for the R&D tax credit, including:
- Activities to create new product offerings
- Enhancing the performance, reliability, or quality of existing products
- Creating new or improving existing manufacturing processes
It is a great time for businesses to take advantage of this profitable incentive. In order to obtain the R&D tax claim, it is essential to have all proper documentation, including research activities and costs incurred. Along with the proper documentation, it is imperative to have a reputable company by your side. With extensive knowledge of federal and state R&D credits, Swanson Reed is committed to helping our clients in all aspects of the R&D tax process. We will gladly be of service to you in any way possible.
