R&D Tax Credit Services

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Jinesh Patel

CEO @ UptimeHealth

As a former R&D tax credit consultant myself, I see tremendous value in TaxRobot. They are fast, accurate, efficient, and have true experts supporting you through the process. I highly recommend them to anyone considering an R&D Tax Credit software to complete their analysis.

Why choose TaxRobot
for R&D tax credit calculations?

TaxRobot takes the guess work out of claiming tax credits by automating the process with technology. It is now possible to maximize your R&D tax credit and create audit-proof documentation in a fraction of the time that it takes with a traditional tax credit study. The founders of TaxRobot are true subject matter experts with extensive experience calculating, substantiating, and defending the R&D tax credit.

We make the R&D tax credit simple.

A Message from our Founders

With TaxRobot, we have taken our 15+ years of experience in tax consulting and used it to create the most comprehensive tax credit software on the market. Working for large consulting firms helped us learn the best processes, but also showed us there’s often a lot left on the table when it comes to tax credit calculations. Our software provides the same expertise of large firms, while eliminating human error. The best part is that in addition to a robust tax credit software, you will always have access to industry experts who support the calculation.

Using TaxRobot

Using tax credit consultants

How it Works

Our software takes a comprehensive R&D tax credit process developed by subject matter experts and reduces it to three simple steps. You can now complete your tax credit claim in half the time without sacrificing the quality of the analysis and the reporting that supports it.
Provide Your Information
Link Your Systems
Receive Your Refund

R&D tax credit FAQs

We don’t charge our clients unless we find a benefit. Additionally, if our clients are not satisfied with their credit estimate after Phase 1 of our process, they may walk away without paying for services rendered during the Value Identification portion of the tax credit study. If the client continues with the tax credit study, we charge a flat fee determined by a percentage of the benefit we identify. The cost of a tax credit study will never exceed the benefit received by the client.

The four-part test as outlined in the Internal Revenue Code is used to determine qualified R&D activity.

The Four-Part Test
1). New Or Improved Business Component

Creation of a new product, process, formula, invention, software, or technique; or improving the performance, functionality, quality, or reliability of existing business component.

  • Construction of new buildings or renovation of existing buildings
  • Invention of a software application
  • Manufacturing of a new product or the improvement of the production process for an existing product
  • Creation of design documentation
2). Technological In Nature

The activity fundamentally relies on principles of the physical or biological sciences, engineering, or computer science. A taxpayer does not need to obtain information that exceeds, expands or refines the common knowledge of skilled professionals in a particular field.

  • Physics (relationship between mass, density and volume; loading as the
    result of gravitational attraction)
  • Engineering (mechanical, electrical, civil, chemical)
  • Computer science (theory of computation and design of computational systems)
3). Elimination Of Uncertainty

Uncertainty exists if the information available to the taxpayer does not establish the capability or method for developing or improving the business component, or the appropriate design of the business component.

  • The capability of a manufacturer to create a part within the specified tolerances
  • The appropriate method of overcoming unsuitable soil conditions during construction
  • The appropriate software design to meet quality and volatility requirements
4). Process Of Experimentation

A process designed to evaluate one or more alternatives to achieve a result where the capability or method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities.

  • Systematic process of trial and error
  • Evaluating alternative means and methods
  • Computer modeling or simulation  Prototyping  Testing

The R&D tax credit is one of the most misunderstood tax incentives available. Considering the myriad of industries and activities that legally qualify for the credit, the term “research and development” is a misnomer. Additionally, the R&D tax credit requires specialized knowledge and technology to identify and calculate the incentive properly.

Companies of various industries are unaware that they are eligible to claim the R&D tax credit. Under the Internal Revenue Code’s definition of R&D, many common activities qualify. Our specialists have successfully identified and delivered tax benefits for clients in industries including architecture, engineering, construction, manufacturing, and technology. Additionally, the following industries also qualify for the R&D tax credit:

The R&D tax credit can be claimed for all open tax years. Generally, open tax years include the prior three tax years due to the statute of limitations period. In certain circumstances, the law allows businesses to claim the R&D tax credit for an extended period of time. It is common for companies to amend previous tax years to claim this benefit and reduce the maximum amount of tax liability.

Each tax credit study is tailored to ensure that TaxRobot can analyze the required information and perform the necessary calculations to meet the needs of each client. A typical tax credit study lasts about six weeks, however, in the event of a pressing deadline, Parachor can complete a study in as quickly as one week.

Each tax credit study is tailored to ensure that TaxRobot can analyze the required information and perform the necessary calculations to meet the needs of each client. A typical tax credit study lasts about six weeks, however, in the event of a pressing deadline, Parachor can complete a study in as quickly as one week.

Partnerships and S corporations must file this form to claim the credit. The credit will flow from the Form 6765, to the Schedule K-1, to the Form 3800 on the individual’s tax return. For individuals receiving this credit that have ownership interest in a partnership or S corporation, Form 6765 is not required on the individual return.

TaxRobot is not an accounting firm, we focus specifically on the R&D tax credit. We partner with CPA firms to complement their services and deliver benefit to their clients.

Individuals claiming this credit can report the credit directly on Form 3800, General Business Credit if their only source for the credit is a partnership, S corporation, estate, or trust. Otherwise, Form 6765 must be filed with the individual’s tax return (e.g. sole proprietorship).

For tax years prior to 2016, the credit can be used to reduce the taxpayer’s regular tax liability down to the tentative minimum tax. The credit cannot be used to offset alternative minimum tax. Beginning in tax year 2016, eligible small businesses have expanded utilization for the credit. For these eligible small businesses, the regular tax liability can offset alternative minimum tax using the “25/25” rule.

Want to see how much you’re owed?

R&D Tax Credit Guide

Filing taxes can be complicated enough for individuals. Still, the process becomes even more frustrating when you’re a business owner, especially a successful one that operates multiple departments within a complex industry. Thankfully, our experts at TaxRobot can ensure you get your business taxes done right the first time through our automated processes. Not only that, but we’ll also help you avoid any pesky audits and increase your chances for more significant tax returns. Please continue to learn everything you need to know about research and development (R&D) tax credits and whether or not your business qualifies for them. And for even more information on R&D tax credits and what they can do for your business, please also consider exploring our range of expertly written, educational articles. 

Related: R&D Credits & AMT: Here’s What to Know

What is the R&D Tax Credit?

The R&D tax credit is a specific tax credit available to companies that actively develop new or improved business components to enhance functionality, performance, quality, and reliability. Said components typically include products, computer software, processes, techniques, formulas, and inventions. The R&D tax credit is dedicated to businesses at both the state and federal levels, with over 30 states currently offering the credit to help businesses and organizations offset state tax liability. 

How Can You Know if Your Company Qualifies for an R&D Tax Credit?

Eligibility for the R&D tax credit is much broader than many companies realize. It applies to product development and various operations and activities, including software development, manufacturing processes, and quality enhancement operations. Startups may also be able to apply for the R&D tax credit against their payroll tax for up to a maximum of five years. Additionally, your business or organization may be eligible to receive the R&D tax credit if it;

  • Hires designers, scientists, or engineers
  • Works to improve existing products
  • Develops patents, prototypes, processes, or software
  • Devotes time and other resources to create new and innovative products

Related: R&D Credits for Software Companies: What to Know

Determining Eligibility: The Four-Part Test

In addition to the above, any company that encounters and actively resolves technological challenges may be eligible for the R&D tax credit. However, this largely depends on whether the work that the company does meets the criteria established by the following four-part test specified in the Internal Revenue Code (IRC) and Treasury Regulations.

1. Qualified Purpose

The purpose of the research in question must be to create new or improved business components, products, processes, software, formulas, inventions, or techniques that result in new or enhanced performance, reliability, quality, or function.

2. Elimination of Uncertainty

A company must demonstrate that it has thoroughly attempted to eliminate all uncertainty about improving or developing new business components. Uncertainty exists if the information available to the company does not establish the capability or method for developing or improving the business component, or the appropriate design of the business component.

3. Process of Experimentation

Through simulations, modeling, systematic trial, and error, or other methods, a company must demonstrate that it has evaluated one or more alternative solutions for achieving its desired results. 

4. Technological in Nature

The company’s experimentation must rely on hard science, such as chemistry, physics, computer science, engineering, or biology, to meet their end result. However, companies are not expected to exceed, refine, or expand any existing scientific principles to qualify for the credit.

Are you currently searching for a fast, easy, and effective way to help automate your R&D tax credit for the 2022 tax season? Our experts here at TaxRobot have everything you need to start earning bigger refunds while also audit-proofing your tax paperwork this year at value-based pricing you won’t find anywhere else.

How Can My Business Claim the R&D Tax Credit?

The exact amount of R&D credit that a company can claim on its taxes is dependent on a wide array of factors. Still, the potential savings they can receive will make it worth the time to undergo a thorough investigation. For example, tax credits have the potential to offset income taxes, which can significantly reduce a business’s tax burden for the years that qualified R&D activities occurred. Companies that have not previously taken advantage of the credit can look back on all of their open tax years- typically three to four years- to claim their missed opportunity. 

Businesses can claim the credit by filling out and filing IRS Form 6765, Credit for Increasing Research Activities. As part of this process, businesses need to identify qualifying expenses and provide adequate documentation that shows that the costs in question meet the requirements to qualify for the credit.

What Documentation do You Need to Claim the R&D Tax Credit?

To qualify for the R&D tax credit, companies need to carefully evaluate and document their research activities to establish the number of qualified research expenses paid for each eligible research activity they have undergone. Some of the documentation they will need to provide to qualify for the credit includes;

  • Lab results
  • Project lists and notes
  • Payroll records
  • General ledger expense details
  • Emails and other documents produced through the company’s regular course of business

The above records may also need to be combined with credible employee testimony to form the basis of a successful R&D credit claim for any given tax year.

Related: How to Qualify and Claim the R&D Tax Credit

Try TaxRobot, Get an R&D Credit of up to $250,000.

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R&D Tax Credits Don’t Have to Be Complicated

Filing business taxes can be a highly complicated and frustrating process, but taking the time to do it correctly and applying for all tax breaks, credits, and benefits that your business may qualify for can be a huge benefit. Now that you have a more thorough comprehension of what goes into qualifying and applying for the R&D tax credit, you can work diligently to ensure that your business receives all of the tax advantages it rightfully deserves. To learn even more about the R&D tax credit and how to effectively apply for it, please consider exploring the quality services offered by our experts here at TaxRobot today!

Filing taxes is never a fun experience for anyone, especially when you’re doing your best to ensure you’ll get as big a return as possible while avoiding the hassle of any future audits. Thankfully, our trusted experts at TaxRobot offer users a fast, easy, and effective way to automate their R&D tax credit at value-based pricing.

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