Minnesota 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 Minnesota 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 Minneapolis, Minnesota develops circuit boards used by their clients. It had never before claimed the R&D credit for the development activities of its software programmers. This project involved a four-year study with a three-year look back to claim credits for years 2010 through 2013. The Company qualified for the federal R&D Tax Credit of $294,360 and an additional $147,139 of state R&D Tax Credit in Minnesota.
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FEDERAL
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MINNESOTA
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Year
|
Total QREs
|
Credit
|
Total QREs
|
Credit
|
||
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2013
|
$1,045,800
|
$104,580
|
$1,045,800
|
$52,290
|
||
|
2012
|
832,499
|
83,331
|
832,499
|
41,625
|
||
|
2011
|
565,925
|
56,593
|
565,925
|
28,296
|
||
|
2010
|
498,563
|
49,856
|
498,563
|
24,928
|
||
| Total | $5,503,651 | $390,726 | $5,503,651 | $516,329 | ||