Free R&D Tax Credit Analysis
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AEC Industry Qualifying Activities
If you’re a member of the Architectural, Engineering, and Construction (AEC) industry, you know that your industry is responsible for maintaining and upgrading America’s infrastructure—a key priority in the U.S. today.
But are you aware that the federal government and 35 U.S. states offer a research and development (R&D) tax credit that can reimburse you (a company in the AEC industry) for up to 10% of your eligible R&D costs? Created in 1981 in response to Japanese competition, this tax credit keeps the U.S. a world leader in technological progress by rewarding companies that innovate through developing new products, processes, or inventions.
Valid IRS AEC Expenses
What expenses does the IRS recognize as eligible for the credit? By and large, the tax credit is a jobs credit—a wage credit. Payroll expenses make up the majority of claims. Overall, here are the major R&D expenses that the IRS views as valid:
- Design, engineering, and technical wages, which may include CAD work
- Third-party contractor costs for engineering, testing, and creating models
- Supplies and raw material used to produce prototypes and models
- Third-party software development and integration cost
Example AEC Qualified Activities
- Creating new or improved designs for structures
- Creating preliminary designs and development plans
- Creating preliminary computer-aided design (CAD) modeling and testing
- Creating schematic designs
- Evaluating various design alternatives
- Designing the foundation and earthwork for site conditions
- Creating new internal-use software applications to interact with customers and vendors
- Creating unique functional and energy-efficient designs
- Obtaining Leadership in Energy and Environmental Design (LEED) certification
- Geotechnical engineering
- Foundation design and engineering
- Structural design and engineering
- Facade design and engineering
- Design and engineering for mechanical, electrical and plumbing (MEP) installations
- Building information modeling (BIM)
- Materials engineering
- Designing temporary structures such as scaffolding, falsework, and formwork
- Value engineering
- This tax credit don’t only apply to successful projects. If your attempt at innovation didn’t succeed, you can still win the credit.
- You don’t have to develop a product or process that’s new to your industry. What you create must only be new to your company.
- You can capture the tax credits for the current tax year and for the prior three open tax years. If you have performed qualifying activities in the past, this could deliver substantial tax savings to your business.
- Did you miss the tax deadline for filing, but now you realize you could have applied for the credit? Simply file an amended return to file you claim.
- If your business brings in $50 million or less in gross receipts, you can use your R&D tax credits to pay off your Alternative Minimum Tax (AMT)
Getting an R&D Tax Credit Analysis to see if you qualify is the first step!
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Case Studies R&D Tax Credit
1 Year Tax Savings: $18,078 (Federal Only) Study Highlights Wages $525,358 Supplies $26,953 Rental or lease of computers 27.5-Year Contract Research $11,760 Total Qualified …
1 Year Tax Savings: $18,078 (Federal Only) Study Highlights Wages $358,407 Supplies $26,953 Rental or lease of computers 27.5-Year Contract Research $14,227 Total Qualified Research …
1 Year Tax Savings: $72,430 (Federal Only) Study Highlights Wages $1,342,919 Supplies $0 Rental or lease of computers $0 Contract Research $0 Total Qualified Research …
Top Articles: R&D Tax Credit
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IRS Update *** The IRS is extending for another year (through January 10, 2024) the transition period during which taxpayers are provided 45 days to perfect a research credit claim for refund prior to IRS’s final determination on the claim. A recent comment by an IRS official indicating that the agency may extend the … Read more
You may know that life sciences are eligible for federal research and development (R&D) tax credits nationwide—but did you know that New York State offers …