Pennsylvania 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 Pennsylvania 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 Pennsylvania, Pennsylvania claims R&D Tax 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 Credits of $359,917 and an additional $148,750 in Pennsylvania state R&D Tax Credits.
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FEDERAL
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PENNSYLVANIA
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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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2014
|
$1,300,000
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$135,333
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$1,300,000
|
$65,000
|
||
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2013
|
900,000
|
91,000
|
900,000
|
43,750
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||
|
2012
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650,000
|
63,000
|
650,000
|
27,500
|
||
|
2011
|
450,000
|
38,500
|
450,000
|
12,500
|
||
| Total | $3,300,000 | $359,917 | $3,300,000 | $148,750 | ||