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.
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FEDERAL
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ILLINOIS
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Year
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Total QREs
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Credit
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Total QREs
|
Credit
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||
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2014
|
$2,050,000
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$200,270
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$2,050,000
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$52,715
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||
|
2013
|
1,585,000
|
160,510
|
1,585,000
|
46,020
|
||
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2012
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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 | ||