MANUFACTURING

The R&D credit
‍for manufacturing companies

The R&D credit for manufacturing companies

Manufacturing companies across the United States operating in all areas of manufacturing, can utilize R&D tax credits. Whether your company manufacturers pens or airplane parts, a portion of the work you do qualifies.

How can the R&D tax credit be used?

There are various ways that the R&D tax credit can be utilized.
FEDERAL/STATE TAX LIABILITY
Reduce your federal and/or state tax liability in current years, and receive refunds for past years.
FICA PAYROLL TAX LIABILITY
Reduce your FICA payroll tax liability (up to $250,000 per year). Requirements:
‍- Less than five years old since formation.
- Less than $5 million in revenue per year (includes companies that are pre-revenue).
CARRY IT FORWARD
Unused tax credits can be carried forward for up to 20 years, whether or not your company has achieved profitability.
ALTERNATIVE MINIMUM TAX (AMT)
Apply the tax credits against Alternative Minimum Tax (AMT) beginning January 1, 2016.

Approved R&D activities

Companies claim billions in R&D tax credits each year, but most still go to large corporations. Now startups and SMBs can take advantage of America’s biggest tax incentive.
Developing processes, patents, formulas, techniques, prototypes, or software (intellectual property)
Devoting time and resources to manufacturing or developing new or innovative products
Improving or redesigning existing products
Recruiting scientists, designers, or engineers

Credit-generating expenses

Your R&D tax credit is made up of Qualified Research Expenditures (QRE’s). These comes from a variety of sources, including wages, supplies and third-parties.
W2 wages of individuals performing, supervising, or assisting R&D activities
65% of payments to third-party consultants,
contractors, and/or companies
Supplies/materials used in qualified R&D activities
Partnership earnings and/or Schedule C profits

Credit-generating expenses

Your R&D tax credit is made up of Qualified Research Expenditures (QRE’s). These comes from a variety of sources, including wages, supplies and third-parties.

Get in touch with our team.

Discover how outsourcing your R&D tax credit studies to HighPeak Advisors can bring you greater returns and peace of mind.

480.948.1063

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