Massachusetts 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 Massachusetts 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
A life sciences company in Boston, Massachusetts with fewer than 100 employees had never before claimed the R&D Tax Credit. This project involved a multi-year study covering the tax years 2018 - 2020. The Company qualified for the federal R&D Tax Credit of $312,666 and an additional $81,250 in Massachusetts state R&D Tax Credit.
|
FEDERAL
|
MASSACHUSETTS
|
|||||
|
Year
|
Total QREs
|
Credit
|
Total QREs
|
Credit
|
||
|
2020
|
$1,400,000
|
$141,166
|
$1,400,000
|
$43,750
|
||
|
2019
|
$1,000,000
|
$98,000
|
$1,000,000
|
$25,500
|
||
|
2018
|
$750,000
|
$73,500
|
$750,000
|
$12,500
|
||
| Total | $3,150,000 | $312,666 | $3,150,000 | $81,250 | ||