Get to Know the R&D Tax Credit
What work qualifies?
Many businesses are eligible for the R&D tax credit, but don’t realize it. Examples of industries that often qualify include software, biotech, manufacturing, and the list goes on.
Activities qualify for the tax credit if they meet each of these criteria:
Qualified purpose
Are you developing or improving a product, process, formula, or software?
Technological in nature
Is your work within physical or biological sciences, engineering, or computer sciences?
Process of experimentation
Are you systematically evaluating one or more alternatives?
Eliminate uncertainty
Are you asking questions like, “Can we develop it?” or “How do we develop it?”
Congratulations!
You may qualify for the R&D tax credit. Book a demo to find out how to get the money you deserve.
Credit where credit is due
Explore more about the R&D tax credit and how we can help your business thrive.
startup
Startups can claim $250K per year
Startups have a unique advantage when it comes to the R&D tax credit. Young companies with less than $5 million in gross receipts can use the R&D tax credit to offset payroll taxes up to $250,000 per year.
What can the R&D tax credit do for your business?
Reduce your payroll taxes
Use as non-dilutive capital
Carry your credit forward
Sample Tax Scenario
A tech startup based in San Francisco raises $2.8M to develop smart dental technology. Last year, $1M of this capital was spent on qualified innovation.
Wages, US-based
$804,000
Contractors
$23,450
Supplies
$184,655
Total R&D spend
$1,012,105
Estimated credit amount
$
Monetized against payroll taxes
growth-business
Helping growth businesses grow
You've outgrown the payroll offset and can now monetize the R&D tax credit against income tax. Get credit for all the work you’re doing to drive the world forward while increasing your bottom line.
What can the R&D tax credit do for your business?
Use against your income tax
No limit on what you can claim
Carries forward for future growth
Sample Tax Scenario
A manufacturer invests $4M to improve product quality. Last year, $1.16M of this capital is spent on qualified innovation.
Wages, US-based
$1,102,000
Contractors
$41,145
Supplies
$24,000
Total R&D spend
$1,167,145
Estimated credit amount
$
Used as an income tax credit and/or carried forward on balance sheet for 20 years
enterprise
Driving the world forward with your innovation
Innovation is at the forefront of your company. You now have the ability to complete an in-house R&D study with confidence, transparency, and audit-ready documentation.
Is there a better way to complete your R&D study?
Secure your data
Save time
Know your costs
Sample Tax Scenario
Large auto glass repair company
The company struggled with centralized data collection to efficiently organize and complete a timely R&D study and ensure they remained compliant.
The Solution
Using our compliant R&D tax platform, the tax director had transparency into their R&D study to distribute tasks, send notifications to SMEs, and monitor study workflow.
The Result
Out of $250M overall technology spend, $44M met the standard of qualified research expenses, providing the company with $4.8M in federal and state R&D tax credits.
Sample R&D tax credit
$M
tax-practitioner
The money your clients deserve
Help your clients get the tax credits they’ve earned by driving innovation forward.
What are the benefits of an R&D tax practice?
Create value for clients
Retain existing clients
Attract new clients
Sample Tax Scenario
Top 100 CPA firm
With an increasing number of qualified clients, an Atlanta-based CPA firm wanted to grow their R&D practice with a centralized solution to generate value and ensure compliance.
Average credit per client
Using the Clarus R+D tax platform, the firm manages study workflow, optimizes credit calculations, creates client reports, maintains data integrity, and archives projects for future years.
The Result
This Atlanta-based accounting firm now generates an average tax benefit of $130,000 for clients through their thriving tax incentive practice, powered by the Clarus R+D tax platform.
Average credit per client
$K+
Solutions for every business
See our R&D tax credit software designed just for you.
FAQs
The U.S. government created the R&D tax credit in 1981 to incentivize American-based companies to create innovative technology, instead of losing intellectual property to other nations.
Many companies were not eligible to receive a current benefit until the PATH Act was passed in 2015. And once passed, not a lot of companies heard about it. Even companies that did know about it failed to pursue it, due to complexity and time constraints. We offer a solution that simplifies the process and maximizes ROI.
No! The R&D tax credit was created by the U.S. government to give funds back to companies that spend money on technology-based innovation.
Simply put, the R&D tax credit creates money that goes back into your company’s pocket to fuel further innovation and growth. Estimate your R&D credit with our quick calculator.
The R&D tax credit can be used to offset:
- Income taxes if you are in a taxable position.
- Alternative Minimum Tax (AMT) if you have less than $50 million in average revenue and you owe AMT in the current year.
- Employer portion of social security taxes up to $250,000 each fiscal year if you are a qualified small businesses.
With Clarus, it takes a fraction of the time to pursue the R&D tax credit compared to traditional R&D studies. Learn more about our technology-driven process.
No. Companies in many different industries qualify. Learn more about the R&D tax credit.
You receive money every year you are eligible.
Many companies don’t realize they are eligible. If your company invests in any type of innovation, you may have qualifying R&D activities. Gauge your eligibility with our quick calculator.
We aim to maximize the intent of the government by building awareness of the R&D tax credit amongst all companies investing in technology-based innovation.
Our pricing is built to fit your business and designed to reflect the efficiencies of our process. Startups pay a small base fee plus a percentage of their credit with extended terms.
In our experience, the majority of companies that have claimed R&D tax credits are not optimizing them and are overpaying for services. With a customized mix of technology and support, our R&D tax credit platform helps companies identify, document, and calculate credits more efficiently and effectively.
Choose what works best for your tax team. We can deliver your R&D study using our full-service solution. Or you can license our software to do it yourself.
Our R&D tax credit platform was built by tax experts from the Big 4 Accounting firms with over 30+ years of R&D experience. Along with our tech experts, our software is consistent and reliable, ensuring all IRS required documentation is easily generated right from the software.
The Clarus R+D tax credit platform incorporates processes and workflow to identify, document, and calculate credits efficiently while providing all required IRS and supporting documentation to confidently defend your earned credits.
For enterprise customers, our software and support packages are based on a fixed price.
The 2015 PATH Act leveled the playing field. The number of companies claiming the R&D tax credit is expected to quadruple by 2025. About half of these companies are startups and SMBs with an average credit of $40k. These are your clients and you need the right tool to serve them.
CPA firms with an existing R&D tax practice often choose to partner with Clarus R+D for greater efficiency and revenue potential – and, most importantly, compliance.
In a nutshell, technology. Our software simplifies the process and reduces fees.
Many common activities completed by software developers qualify for the R&D tax credit. Read more about the value of this benefit for developers.