In 2019 alone, nearly $60 billion in R&D tax credits went unclaimed, according to data from the Congressional Research Service. With over $90 billion in total credits available, that's a shocking amount of lost opportunity. The reason for this? Many businesses either didn't know about the credits or failed to claim them at the right time.
Don't let your company become another statistic. In this post, we'll explore why timing matters for making the most of your R&D tax credits. We'll also provide guidance on what to do if you've already missed critical deadlines. So, let’s dive in.
Importance of Timing
The ideal time to complete your R&D tax credit study is well in advance of your April 15 or October 15 tax filing deadlines. Doing so allows you ample time to gather the necessary documentation, consult with experts and integrate the credits into your financial planning. Early preparation can also help you identify additional qualifying activities that you might otherwise overlook.
Consequences of Missing Deadlines
Missing the tax filing deadline for claiming your R&D credits is not the end of the world, but it does come with its own set of challenges. Delayed claims can affect your cash flow and may require additional administrative work.
The Amended Return Lifeline
Missed the deadline this year? Here's a quick guide to claiming your credits through an amended return:
- Consult an Expert: Get advice from a tax specialist with R&D credit experience.
- Gather Records: Collect documentation that proves your eligible activities.
- File Form 1040X: Use this form to amend your federal income tax return.
- Don't Forget State Returns: Amend state returns as well if you qualify for state credits.
- Submit and Wait: Once filed, monitor progress of your amended return.
Follow these best practices for seamless R&D tax credit claims:
- Document Thoroughly: Keep detailed records of all your R&D activities.
- Consult Early: Engage an expert as soon as possible for maximum credits.
- Set Reminders: Schedule time for R&D tax planning in your calendar.
Make Sure You Plan Ahead
At the end of the day, timing is everything when it comes to reaping the full rewards of your R&D tax credits. Companies who plan ahead and meet deadlines can realize the maximum benefit. But even if you've missed the initial window, amendments can still save the day.
If you have more questions or need expert guidance, feel free to contact ETS for a no-obligation consultation.