R&D incentivizes businesses to continue efforts improving products, processes or services in The Evergreen State.
Though the federal Research & Development (R&D) tax credit is an invaluable tool for Washington companies of many sizes, it is also one of the most overlooked tax benefits in the current US tax system.
This federal government credit rewards businesses for taking risks and providing jobs. However, not only do Washington businesses often leave money on the table by not claiming the credit at all, but they also frequently fail to claim their entire credit because of lack of knowledge or documentation. This dollar-for-dollar cash reward adds up quickly, but the proper procedure needs to be put in place to maximize one’s rewards.
How Washington companies can apply for the Federal R&D tax credit
From farming to manufacturing to high tech, the Federal credit is available to companies of all sizes and in a variety of industries. If you perform any type of R&D efforts, such as the development of a new product, improvement of a current product, or expanding of a new formula, your best course of action is to work with national tax experts to leverage your activities into a significant credit that makes a difference.
Other activities that qualify for R&D tax credits include:
- Molding plastics
- Developing a new mobile app
- Designing new irrigation systems
- Researching an energy-efficient process for brewing beer
As you can see, qualified activities come from a variety of industries. There are some activities that do not qualify for R&D credits, however.
Examples of excluded R&D Tax Credit activities include:
- Research conducted in other countries;
- Activities that are not rooted in hard sciences, and instead rely mostly on anthropology, arts or humanities;
- Activities that highlight customer preference, such as market research studies;
- Activities that simply repeat an already established business activity, without adding anything new
Additional Business Perks Though the State of Washington
While Washington state does not currently have an active state Research and Development tax credit, it does have an active Business and Occupation (B&O) credit for new employees in manufacturing and research & development in rural counties. This tax incentive can quickly add up for Washington state employers. The B&O state tax perk is open to manufacturers, R&D laboratories, and commercial testing facilities located in rural counties or within a CEZ. It credits the following:
- $2,000 credit/position with annual wages/benefits of $40,000 or less; or
- $4,000 credit/position with wages/benefits of more than $40,000 annually.
How can National Tax Group help you?
If you are a company owner, there is no risk in reaching out to us for your FREE assessment of benefits. You’re already doing the work to further your company in a fast-paced market, and we can help take it one step further. Call National Tax Group at 561-257-3436 to start your free assessment.