The Expansion Of The Online Education Industry Opens The Door To Beneficial Tax Savings For Many Companies

Teen girl student wears headphones while taking a distance learning lesson with online teacher and study on computer screen at home.

Over the past couple of years, the need for technology in the education sector has increased significantly and continues to rise as more individuals are now pursuing their education online. This increase began partially due to the response to school closures during the pandemic. With schools and universities needing to adjust to online classes and advancements, the industry as a whole saw a major shift toward technology.

 

In fact, according to the Learning Counsel, $35.8 billion was spent on hardware, software, as well as digital curriculum resources and networks in the K-12 district in the US alone. This was an overall 25% increase from the money spent in 2019.

 

Because of this pivot to online education, many companies had to develop new software, enhance current digital curriculums, and create new methods for online learning that could qualify them for specific research and development tax credits.

 

What Are Research And Development Tax Credits?

 

For companies who are continually advancing and taking risks that improve the quality, function, or reliability of a process or product, they can receive certain tax credits that offset the cost it took to perform these activities. These tax credits are dollar-for-dollar tax credits that are given to businesses by the government.

 

Introduced in 1981 through the Economic Recovery Act, the research and development tax credits were created to help encourage businesses to continue developing and researching their products and methods in order to push growth and advancement in America.

 

What Activities Qualify Companies In The Education Technology Industry?

 

With the leap to technology in education and in the classroom, it may be hard for some companies to recognize when they are actually performing activities that are considered for R&D tax credits.

 

Here are a few examples of activities that would apply:

 

  • Developing online educational programs or learning modules
  • Developing new technologies such as live video chats, classroom/learning apps, etc.
  • Creating E-learning websites
  • Creating and conducting digital assessments or exams
  • Live online tutoring help/programs
  • Developing and improving the methods of gamification in the classroom
  • Developing virtual, augmented, contextual, or extended reality technology to create more immersive online learning experiences
  • Developing apps or programs that help students in the classroom collaborate with each other virtually

 

How Can You Claim The Credits You Are Owed?

 

Getting together and calculating these credits can be a complicated process that includes getting together documented expenses that meet the eligibility requirements and involve going over past years of activities as well.

 

To receive all the credits you’re owed, having a team of tax experts to help break down what your company can claim and what you’ll need to claim them will make the process a lot smoother. National Tax Group has an extensive team of tax professionals that can help. Call (561) 257-3436 and set up your free assessment to see if your company qualifies for these lucrative R&D tax credits.

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