Rhode Island 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 Rhode Island 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 Providence Rhode Island designs and manufactures medical instruments for the health services industry. The company 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 $204,167 and an additional $271,347 in Rhode Island state R&D Tax Credits.
FEDERAL
|
RHODE ISLAND
|
|||||
Year
|
Total QREs
|
Credit
|
Total QREs
|
Credit
|
||
2014
|
$700,000
|
$56,000
|
$700,000
|
$73,822
|
||
2013
|
650,000
|
52,500
|
650,000
|
69,597
|
||
2012
|
600,000
|
49,000
|
600,000
|
65,372
|
||
2011
|
550,000
|
46,667
|
550,000
|
62,556
|
||
Total | $2,500,000 | $204,167 | $2,500,000 | $271,347 |