How To Get Your R&D Tax Credit

| Product Lifecycle Management
Posted By: Michelle Duerst

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R&D Tax Credit

Companies can save potentially millions in taxes with a R&D Tax Credit. 

What is it?

The IRS.gov site explains, “The expenditures of research and development ("R&D") are generally capital expenses. However, you can choose to deduct these expenditures as current business expenses.”[1] 

What does this mean?

If you tracked your R&D time in a project management software, you can generate a list and submit it for a credit against qualified R&D expenditures. 

What do you need?

Simply stated, you need to have detailed records of R&D hours.  While you could enter hours in a Project Management software, it is best to have it fully integrated with an enterprise Product Lifecycle Management (PLM) software like Selerant’s DevEX.

PLM builds upon project management with additional functionality and integration that will provide more accurate reports, such as the ability to verify that the hours entered are applicable for the R&D Tax Credit.  Some activities are excluded and will cause issues if submitted (ex: quality testing, promotions, surveys, management, etc.)

PLM can also provide a higher level of visibility, report capabilities, and audit logs to see when/who entered the hours.

See the full list of exclusions for R&D Tax Credit here.  

What can you do in the future?

If you didn’t track last year’s hours, prepare to take advantage of it this year.  Find a PLM system that meets your needs, but also takes full advantage of the granular reporting needed for the R&D tax credit.

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[1] Source:  https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Research-and-Development-Manufacturing-Tax-Tips