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

A firm in Baltimore, Maryland 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 covering the tax years 2011 – 2014. 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.

  
FEDERAL
 
MARYLAND
Year
Total QREs
Credit
Total QREs
Credit
2014
$3,000,000
$261,333
$3,000,000
$149,500
2013
2,600,000
224,000
NA
NA
2012
2,200,000
184,333
NA
NA
2011
2,000,000
177,334
NA
NA
     
Total $9,800,000$847,000 $3,000,000$149,500