Illinois 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 Illinois 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 company in Aurora manufactures electronic components. The company claims R&D credits each year for the design and development activities of its engineers. This project involved a multi-year study covering the tax years 2011 - 2014. The Company qualified for the federal R&D Tax Credit of $582,750 and an additional $165,750 in Illinois state R&D Tax Credit.

  
FEDERAL
 
ILLINOIS
Year
Total QREs
Credit
Total QREs
Credit
2014
$2,050,000
$200,270
$2,050,000
$52,715
2013
1,585,000
160,510
1,585,000
46,020
2012
1,305,000
140,070
1,305,000
45,240
2011
835,000
81,900
835,000
21,775
     
Total $5,775,000$582,750 $5,775,000$165,750