Florida 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 Florida 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 Orlando company designs and develops component parts for the aviation industry, a qualified target business industry for Florida's R&D tax credit. The Company started R&D in 2017 and claims R&D credits each year for the development activities of its engineers. The company submits its application and is awarded an R&D credit for the 2021 tax year. Prior year Florida QREs for 2017, 2018, 2019, and 2020 are as follows: $600,000, $700,000, $800,000, and $900,000, respectively. The Federal credit calculated below is utilizing the Alternative Simplified Method.
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FEDERAL
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FLORIDA
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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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2021
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$1,000,000
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$84,000
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$1,000,000
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$25,000 | ||