New Jersey 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 New Jersey 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 engineering firm in Newark, New Jersey with fewer than 30 employees had never before claimed the R&D Tax Credit. This project involved a multi-year study covering the tax years 2012 – 2014. The Company qualified for federal R&D Tax Credits of $211,166 and an additional credit of $100,000 in New Jersey state R&D Tax Credit.

  
FEDERAL
 
NEW JERSEY
Year
Total QREs
Credit
Total QREs
Credit
2014
$950,000
$101,500
$950,000
$47,500
2013
600,000
61,833
600,000
30,000
2012
450,000
47,833
450,000
22,500
      
Total$2,000,000$211,166$2,000,000$100,000