R&D Tax Credits for the Automotive Industry

Refunds are available for companies performing research within the Automotive Industry. The research credit provides dollar-for-dollar cash savings each year for companies performing activities related to the development of new or improved products and processes. These benefits could provide much needed cash to hire additional employees, increase R&D, expand production facilities, etc.

Many companies involved with automotive processes are unaware that their efforts within designing and developing their products can yield a large amount of research credits. Examples of R&D activities related to the industry as well as potentially qualifying job titles are listed below.

Examples of Qualifying R&D Activities

Computer-aided design (CAD), modeling, and simulation of parts
Designing and testing prototypes such as vehicle body, alternator, battery, serpentine belts, drivetrain system, transmissions, airbags, brakes, tires, windows, and electrical components
Improving efficiencies in manufacturing processes of the automotive body and internal components
Improving existing parts to increase performance and reliability
Testing automotive parts to meet regulatory compliance and safety requirements

Potentially Qualifying R&D Job Titles

Automotive Engineers
Brake Specialists
Electrical Engineers
Engineering Managers
Production Engineers
Production Supervisors

AMT Offset up to $250,000 in Payroll Tax

For tax years beginning after December 31, 2015, eligible small businesses (those with $50 million or less of gross receipts) may claim the research credit against AMT liability. In addition, qualified start-up companies may elect to use up to $250,000 of the research credit against payroll taxes.

Treasury Regulations have substantially broadened the range of taxpayers who are eligible for the credit. Start-ups to publicly traded businesses who were previously unable to realize a benefit from this lucrative tax credit should reassess their eligibilities.

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The Research & Development Tax Credit is a federal benefit (also available in many states) that was enacted to promote growth, innovation, and inspire advancements in all areas and facets of business. The credit is an undoubtedly beneficial incentive for businesses large and small. However, many companies are hesitant to take advantage of the credit … Read More

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Calculating and documenting the Internal Revenue Code Section 41 Credit for Increasing Research Activities (“Research Credit” or “R&D Credit”) is an intricate and often burdensome undertaking. This process is complicated during the throes of busy season. Fortunately, the Internal Revenue Service (“IRS”) has afforded taxpayers additional time to claim a R&D credit via making a … Read More

Own a Start-up or Small Business? You May Qualify for Federal Research Credits.

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Billions of dollars worth of research credits go unclaimed every year in the United States. This is primarily due to many taxpayers not being aware of the credit or not quite understanding it. In addition, when a reference is made to research and development (“R&D”), taxpayers often think about lab coats and test tubes. In … Read More

KBKG Tax Insight: Now Permanent, R&D Tax Credit Offers Unique Opportunity for Manufacturers

10/01/2018

With the Research & Development (“R&D”) Tax Credit now permanent and expanded, more and more businesses are taking full advantage of this valuable credit. As manufacturing continues to be a mainstay in the American economy, it’s crucial for owners and operators of these facilities to maximize the opportunity provided by the federal government (some states … Read More

R&D Tax Credits for the Automotive Industry

Examples of Qualifying R&D Activities

Potentially Qualifying R&D Job Titles

AMT Offset up to $250,000 in Payroll Tax

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