When to Claim the R&D Tax Credit
Time plays an important factor in the R&D tax credit process. Tax filing dates and rules are set by law so it is important to be aware of filing dates. Filing dates determine when tax returns can be amended, which opens the possibility of claiming more R&D credits. Filing a late claim could result in a missed opportunity to receive a substantial credit.
Calendar Years vs. Fiscal Years
To better understand the filing dates for each type of business, it is important to understand the difference between a calendar year and a fiscal year. Calendar years are always from January 1st to December 31st. Fiscal years can be any consecutive 12-month period, beginning on the first day of the first month and ending on the last day of the last month. Fiscal years drive tax reporting. Taxpayers pick fiscal years different from calendar years to suit their operational purposes, so they aren’t doing taxes in a period of peak activity, like Christmas time would be for retail companies.
Fiscal years that don’t run congruent to calendar years are designated by the month in which they end. For example, a fiscal year that runs from October 1, 2012 to September 30, 2013 is called “fiscal year 2013.”
Corporations (C-Corps and S-Corps)
- Initial filing date: 2 ½ months after the end of the fiscal year.
- Extended filing date: 6 months after the initial filing date.
- EXAMPLE:
- Fiscal year end = December 31
- Initial filing = December 31 + 2 ½ months = March 15
- Extended filing = March 15 + 6 months = September 15
Click here for filing dates for tax years beginning after December 31, 2015.
Limited Liability Companies (LLC’s)
LLC’s are initially treated like a sole proprietorship or partnership with an initial filing date of April 15 and an extended filing date of October 15. LLC’s can elect to change their fiscal year and be treated like a corporation for tax purposes. If this is the case, LLC’s will have the same filing dates as Corporations.
Click here for filing dates for tax years beginning after December 31, 2015.
Individuals, Sole Proprietorship and Partnerships
Individuals, sole proprietorships and partnerships have the same initial filing date of April 15 and an extended filing date of October 15. Individuals receive “flow-through” benefits from S-Corps and LLC’s.
Amended Returns
Corporations and LLC’s can file amended returns up to 3 years after the date of filing. Returns submitted on or before the initial filing date are treated by the IRS as filed on the initial filing date. Returns submitted between the initial and extended filing dates (filing under an extension), are treated by the IRS as filed on the date of submission.
Corporations use Form 1120X to amend a past return. LLC’s use Form 1065X to amend a past return.
Be aware that amending a past return allows the IRS to re-examine that entire year. According to the IRS website, “the IRS can include returns filed within the last three years in an audit. Additional years can be added if a substantial error is identified. If a substantial error is identified, the IRS will not go back more than the last six years.”
Contact a Swanson Reed specialist for further information on claiming the R&D tax credit.
