Don’t Let Cash Slip Through the Cracks to the IRS
Software development companies are able to benefit significantly on their taxes through the Research and Development Tax Credit. These companies are constantly developing new prototypes and products in order to remain relevant and on top in a rapidly growing and competitive industry by performing research activities.
These research activities that are being performed as part of daily operations often qualify for the R&D Tax Credit. Many companies fail to take advantage of the credit simply because they don’t realize that the work they’re doing is qualifying.
Qualifying Research and Development Activities Include:
- Programming software
- Designing and developing new software
- Establishing electronic interfaces and functional relationships between various software modules
- Conducting requirements, domain, software elements or scope analysis for a new functional software enhancement
- Developing new or improved technologies
- Core infrastructure development
Up to 90% of a company’s annual eligible costs can be applied, dollar for dollar, against its federal income tax liability. The money claimed through the Research and Development tax credit can be used to subsidize amounts paid on the salaries of employees performing the research activities, supplies used during the research, contract research, and computer leasing.
The research and development tax credit rewards businesses for taking innovative steps to develop or improve their products, processes, or software. Any company that fits these criteria and is performing research activities that pass the 4-Part Test created by the IRS is likely eligible. The work is already being done, so there’s no reason not to have your research and development examined by a third-party tax firm.