Maine R&D Tax Credit Case Study
The R&D tax credit is one of the most valuable credits leveraged by companies. The R&D credit yields billions of dollars in federal and state benefits to companies engaged in qualifying research. The R&D tax credit can provide a significant reduction to current and future tax liabilities and a source of cash.
Benefits
- Up to 13.5 cents of R&D tax credit for every qualified dollar
- Dollar-for-dollar reduction in your federal and state income tax liability
- Credit carried forward up to 20 years
Qualifications
More companies in Maine can now qualify for the R&D tax credit. Companies are able to qualify R&D activities beginning with the development of concepts and extend to the point where a product, process, formula, or other business component is ready to be commercially released. If you are engaged in any research activities, looking into a potential R&D tax credit may be a great benefit. In addition, look back studies can recognize unclaimed credits for the last 3 or 4 open tax years.
Case Study
An Augusta manufacturing company creating syringes for the medical industry has been claiming the R&D credit for years. The company claims R&D credits each year for the development activities of its engineers. This project involved a multi-year study. The Company qualified for the federal R&D credits of $464,333 and an additional $65,833 in Maine state R&D Tax Credits.
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FEDERAL
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MAINE
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Year
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Total QREs
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Credit
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Total QREs
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Credit
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||
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Year 4
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$1,500,000
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$129,500
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$1,500,000
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$17,500
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||
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Year 3
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1,250,000
|
121,333
|
1,250,000
|
12,500
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||
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Year 2
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1,150,000
|
112,000
|
1,150,000
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15,833
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||
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Year 1
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1,050,000
|
101,500
|
1,050,000
|
20,000
|
||
| Total | $4,950,000 | $464,333 | $4,950,000 | $65,833 | ||