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Frequently Asked Questions

Listed below are some of the most frequently asked questions our team receives about R&D tax credits

What would you like to know?

What are R&D Tax credits?
The R&D tax credit is a permanent federal dollar-for-dollar reduction of income, or payroll, tax liabilities for US based, innovative, technological, or science-focused businesses.
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Does my company qualify for the R&D Tax Credit?
Any business of any size can qualify for the R&D tax credit if the business meets the 4-Part Test, has qualified activities, and qualified research expenses (wages, contractors, or supplies/materials) in a given year.
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What expenses can qualify for the R&D Tax Credit?
Taxable wages, guaranteed payments, US contractors, subcontractors, vendors, supplies and materials used and consumed during prototyping or testing phases, and computer rental and leasing costs as it relates to R&D.
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What can the R&D tax credit be used for?
R&D tax credits can be used to offset current or future income tax liabilities as well as to generate cash refunds in prior years where income tax liabilities were paid. Lastly, for startups, the R&D tax credits can be used against payroll tax liabilities.
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How much can I expect to get in R&D Tax Credits every year?
The R&D Credit is a comparative credit, which means that it will depend on the difference between current year QREs and the prior years QREs. The more research expenses a company incurs year over year, the greater the tax credit will be. Typically, a company can expect a benefit of 7-10% of the federal QREs and another 3-20% in state credits (which vary widely from state to state).
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Which states offer R&D Tax Credits?
36 states offer a state R&D tax credit. Check out our States Pages here for more information.
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How does STRIKE calculate the federal and state R&D tax credits?
Gather financial documentation, analyze expenses, conduct technical interviews, calculate the R&D tax credits and deliver the drafted Federal Form 6765, and applicable state R&D form, to business owner and CPA.
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Can startups that are/were in losses benefit from the credit?
Yes, the federal R&D credit can be carried back one year and forward 20 years. Each state is different when it comes to carryforward and carryback rules, but most follow the general federal guidelines.
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Can my company’s chances of audit increase because of R&D Credits?
If the R&D tax credits are accurately and properly claimed on a timely filed tax return, no. However, amending a prior year tax return to claim the R&D tax credit does increase your audit chances.
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My company does not have a dedicated Research Center or Laboratory, can I still claim credits for my expenses?
Many industries can qualify including manufacturing, software, technology, engineering, architecture, food & beverage, aerospace, and pharmaceuticals.
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Can the R&D Tax Credit be claimed for a prior year?
Yes, tax returns can be amended to claim the R&D tax credit as far as the federal and state statutes of limitations allow for.
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What activities are excluded?
Activities related the arts, soft sciences, sales, marketing, general and administrative, training, market research, funded research, or research conducted outside of the US does not qualify for the R&D tax credit.
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How much is this going to cost me?
Strike works on a success-based fee structure. Strike does not get paid until the company utilizes the tax credits or receives a cash refund from the IRS/State.
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