The Research and Development (R&D) Tax Credit was created to promote U.S. innovation and reward companies for continued investment in research and development activities by providing a dollar-for-dollar reduction in federal and state income tax liability.

Credit can be claimed on qualified research activities that demonstrate:

  • Improvements or change beyond aesthetics
  • Use of testing and experimentation
  • Rely on the principles of science
  • Lead to a new or improved product or process
 

Understanding and claiming incentives your
business has already earned can:

Offset Payroll Taxes

Improve Cash Flow

Expand Research Investment

Lower Overall Tax Rate

 
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How to Identify Your Eligible Credits

Step 1: Assess

Get a Preliminary
Assessment at No Cost

CSSI will help determine what credits your business may qualify for based on IRS guidelines, as well as the potential savings they can realize for your operations.

Step 2: Review

CSSI Conducts a Comprehensive
Review of Your R&D Operations

Our analysts determine what activities meet the federal government’s test for qualified innovation activities and help you claim the credits you’ve earned.

Step 3: Report

You Receive a Full Report with All Necessary Documentation

We’ll help you make sure all credits are in compliance with program regulations and completely and consistently documented year over year.

FAQs

Find Answers to Frequently Asked Questions
About CSSI’s Products and Services

What documentation is needed to claim R&D tax credits?

You should maintain contemporaneous documentation of your research activities, including project records, payroll records, general ledgers, and any other documents that support your qualified research expenses.

How is the R&D tax credit calculated?

The credit is generally calculated as a percentage of qualified research expenses over a base amount, which is determined by your company’s historical research activities.

Can startups benefit from R&D tax credits?

Yes, qualifying startups can use the credit to offset up to $250,000 in payroll taxes annually for up to five years.

How far back can I claim R&D tax credits?

You can typically claim R&D tax credits for the current tax year plus the previous three tax years.

What expenses can be included in R&D tax credit calculations?

Qualified research expenses typically include:

    • Wages for employees conducting research
    • Supplies used in the research process
    • Contract research expenses (65% of payments to contractors)
    • Rental or lease costs of computers used in research activities
    What activities qualify for R&D tax credits?

    Qualifying activities must meet a four-part test:

      • Be technological in nature
      • Involve the elimination of uncertainty
      • Involve a process of experimentation
      • Have a qualified purpose (to create new or improved business components)
      What industries typically qualify for R&D tax credits?

      While many industries can qualify, common ones include manufacturing, software development, engineering, aerospace, pharmaceuticals, food science, and agriculture.

      What are R&D tax credits?

      R&D tax credits are dollar-for-dollar reductions in tax liability for companies that conduct qualifying research activities. They’re designed to incentivize innovation and technological advancement.