RESEARCH TAX CREDIT

Guess what - you do not need to be a rocket scientist or employ men in white lab coats to qualify for the Research Tax Credit.  The Research Tax Credit was designed as a tax break for companies that are developing new or improved products or processes.  So, if your company is creating a new product, upgrading an old one, or just improving your production process, you could be eligible for this tax credit.  The value to your business is a reduction to your taxes of roughly 6% to 12% of your development costs.

Practically speaking, if your company spent $10,000 for qualified research, it could receive a credit against its taxes of $1,200!  That credit is over and above the deductions your company already received for those same expenses! 

To qualify - the development costs must pass a four part test

1) The business expenditures were for the development of a new or improved product or process.

2) The company must have been uncertainty at the outset of the project if a) they had the capability to create the new/improved product or process, or how to create the new/improved product/process or what the proper design was for the new or improved product or process. 

3) The business has to engage in a process of experimentation that is designed to eliminate the uncertainties identified in test #2, by trying out one or more alternatives.  This process of experimentation can be in the form of iterative design, systematic trial and error, computer modeling, the traditional scientific method or other methods.