Put Money Back in Your Hands with R&D Tax Credits
R&D tax credits were established in 1981 by Congress to encourage and assist companies to engage in research and development, and thereby become more productive and competitive. As a manufacturer, you may be unaware that many of your efforts to design your products qualify as
R&D and may make you eligible for tax credits for expenditures associated with these activities.
NJMEP can help you uncover and describe the activities that qualify and assist you in getting the appropriate tax credits.
Your company may qualify for extensive credits if your research expenditures meet the Federal requirements. These
R&D credits may be applied to taxes due or to future tax liability. They may be retroactive for three years in addition to the current year and carry forward for twenty years.
Companies, after working with NJMEP, have re-filed past years returns and received additional credits for those years.
Companies that are not profitable may receive tax credits however they must hold them until they are profitable.
Qualify for R&D Tax Credits with NJMEP
NJMEP will identify, qualify and quantify the expenditures in your organization. Expenditures include: the salaries and wages of the engineers working on a project, the cost of supplies, and third party contractor fees getting SLA or FDM prototype parts made by a rapid prototyping service center. In addition to expenditures, tasks performed by executive leadership, legal, manufacturing, sales engineers, operations and IT are also evaluated. Additional R&D activities, other than
new product development that qualify for this credit. These activities for
business process improvement include:
- Implementing Lean Manufacturing
- ISO 9000 and other standards
- Developing a new business component (product, process, software system, etc.)
- Improving an existing business component
Work-specific criteria under the IRS definition include: - A technical advance must be targeted
- Uncertainty must exist (or be subsequently discovered) in doing the work
- The work must have been carried out in a systematic manner
- Some documentation of the work must exist
Eligible Costs Include:- Salaries/wages of technical and support staff
- Tooling, materials, scrap consumed in the R&D work
- Subcontractor charges related to the R&D work
NJMEP – Your Authority for R&D Tax Credits
R&D Tax Credits are based on the
IRS definition of R&D. Specialists in this area often identify qualifying expenditures that have been overlooked. A ten minute phone conversation with our
R&D Tax Credit specialist to determine your eligibility to get in on this valuable benefit. The IRS does not require discrete accounting for R&D expenses in order to apply for the credit. Our specialists utilize IRS approved methods for determining the actual technical R&D work done and how much money was expended on that work. Clients have benefited from R&D tax credits including:
Injection Molder
Developed product configurations and corresponding mold designs that would allow both reductions in the amount of plastic used per unit and the production of multiple units per molding cycle.
Net result: Tax credit (Federal and State) to the customer in excess of $385,000 (before taxes)
Rubber Manufacturer
Developed a new composite material that would be substantially less permeable, and 50% stronger than an existing material. In addition, the new fabric had to offer superior weather ability and enhanced water shedding characteristics.
Net result: Tax credit (Federal and State) to the customer in excess of $90,000 (before taxes)Medical Device Manufacturer (OEM: Fiber Optic Laser Devices)
Initiated R & D activities when they began development of a miniature, single-use optical device.
Net result: Tax credit (Federal and State) to the customer in excess of $50,000 (before taxes)
Hair Care Products
Development and manufacture of various hair products, which included permanent wave preparations, relaxers, texturizers, colorants, developers, color removers, and approximately 100 different formulations of powdered hair bleach.
Net result: Tax credit (Federal and State) to the customer in excess of $120,000 (before taxes)
Apply for R&D tax credits with NJMEP. Click here, or call NJMEP at (973) 998-9801.