Michigan 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 Michigan 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 car parts manufacturer in Detroit, Michigan has been claiming the R&D credit for years.  The company claims R&D credits each year for the 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 $243,367 and an additional $55,670 of state R&D Tax Credit in Michigan .

  
FEDERAL
 
MICHIGAN
Year
Total QREs
Credit
Total QREs
Credit
2014
$880,000
$75,367
$880,000
$16,750
2013
775,000
64,750
775,000
14,725
2012
650,000
50,750
650,000
12,350
2011
625,000
52,500
625,000
11,875
     
Total $2,930,000$243,367 $2,930,000$55,670