Beginning in March 2020, businesses around the United States were faced with the threat of COVID-19, putting them at risk of losses and closures, compromising bottom lines. As the economic news worsened, medical updates proved even more grim. With an increase in confirmed COVID-19 cases, the medical community suffered the stress of responding, but without the supplies necessary for a fair fight.
Across the board, American industry answered the call, converting normal operations into coronavirus-related production, ranging from personal protective equipment, such as critical N95 masks to life-saving machines like ventilators. Those who stepped up could be eligible for a tax credit. Like so many R&D tax credits, those related to COVID-19 are not being applied for because businesses are unaware they exist or are unsure how to take advantage of them without possible penalty.
We’ll introduce you to these R&D credits and are standing by when your business is ready to apply…
COVID-19 R&D Tax Credits
Although going unclaimed, like so many R&D tax credits, those connected to COVID-19 activities are simple to understand. According to Industry Week, “If businesses undertake certain innovations, repurposing, optimizations, ideation, or research into alternative methods that entail overcoming uncertainty in producing COVID-19 solutions, they may benefit from this tax incentive.”
Taxpayers can take advantage of this R&D tax credit for expense related to:
- Compensation for qualified services
- Supplies required and used by the R&D process
- Contractor fees for qualified research activities up to 65%, no matter the outcome of those efforts
- Payments for research done by educational and scientific research institutions
Qualifications for these credits hinge on the following four assessment criteria:
- Requires a hard science (biological science, computer science, engineering or physical science)
- Develops a new product or process or improved function, performance, reliability or quality
- Requires technological uncertainty before activity is undertaken
- Conducts experimentation to eliminate technological uncertainty, whether by computational analysis, modeling or experimenting involving engineering, formulations, materials and mechanics
As you know, most manufacturing R&D tax credits involve product development. In this case, if your facility adapted its capabilities to manufacture hand sanitizer or masks, for example, you are eligible to apply for these credits.
Of course, you don’t need to make this determination or apply on your own. Contact us today to ensure your business is taking advantage of all eligible R&D tax credits and not leaving any money on the table.
Don't leave money lying on the table!
Don't believe the myths - no business is too small to claim their portion of research and development tax credits. We can help you see if money is owed to you at no obligation to you. Schedule your complementary consultation today.