Maryland 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 Maryland 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 Annapolis firm designs components for the telecommunications industry. The company claims R&D credits each year for the design and development activities of its engineers. This project involved a multi-year study. The Company qualified for The federal R&D Tax Credit of $847,000 and an additional $149,500 in Maryland state R&D Tax Credit.
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FEDERAL
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MARYLAND
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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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$3,000,000
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$261,333
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$3,000,000
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$149,500
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||
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Year 3
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$2,600,000
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$224,000
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NA
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NA
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||
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Year 2
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$2,200,000
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$184,333
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NA
|
NA
|
||
|
Year 1
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$2,000,000
|
$177,334
|
NA
|
NA
|
||
| Total | $9,800,000 | $847,000 | $3,000,000 | $149,500 | ||