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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 is the R&D Tax Credit?

The R&D Tax Credit is a federal dollar-for-dollar reduction of income (or payroll) tax liabilities for U.S.-based businesses involved in innovation, science, or technology.

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Does my company qualify for the R&D Tax Credit?

Businesses of any size and in a variety of industries qualify for the R&D Tax Credit. The only requirements are that they have projects that satisfy the 4-part test and incur qualified research expenses (wages, contractors, supplies/materials) in a given year.

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What expenses qualify for the R&D Tax Credit?

Taxable wages; guaranteed payments; U.S. contractors, subcontractors, and vendors; supplies and materials used during prototyping or testing; and computer rental and cloud storage costs as they relate 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. For companies filing amended, prior-year returns in which income tax was paid, the IRS issues a cash refund. For startups with no tax liability, the R&D Tax Credits can be used to offset payroll taxes.

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How much can I expect to get in R&D Tax Credits every year?

The amount of R&D Tax Credits your company can expect to receive is directly related to i) the amount of qualified research expenses it can claim, and ii) the R&D Tax Credit benefits available in the state in which your business operates.

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Which states offer R&D Tax Credits?

Currently, 36 states offer the R&D Tax Credit. Refer to our state pages for detailed state-by-state information. 

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How does STRIKE calculate the federal and state R&D Tax Credits?

Our R&D Tax Credit experts gather financial documentation, analyze expenses, conduct technical interviews, calculate the R&D Tax Credits, and deliver the completed federal Form 6765 and applicable state R&D tax form(s) to the business owner and CPA.

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Can startups that are/were in losses benefit from the credit?

Yes. For qualified small businesses (QSBs), the current-year federal R&D Tax Credit can be used to offset future payroll taxes owed to the IRS. Thus, startups no longer need to be paying income tax to benefit from the R&D Tax Credit.

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Can my company’s chances of audit increase by claiming R&D Tax Credits?

No. If the R&D Tax Credits are accurately and properly claimed on a timely-filed tax return, there is no increased chance of audit. However, amending a prior-year tax return to claim R&D Tax Credits does increase your audit chances. 

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My company does not have a dedicated research center or laboratory. Can I still claim R&D Tax Credits for my expenses?

Companies in a range of industries have received significant tax benefits through the R&D Tax Credit. These include, but are not limited to, manufacturing, software, technology, engineering, architecture, food & beverage, aerospace, and pharmaceutical companies. 

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Can the R&D Tax Credit be claimed for a prior year?

Yes, federal tax returns can be amended to claim the R&D Tax Credit for three years prior to the current tax year. Most states follow the federal regulations; however, there are some state-by-state variations.

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Which activities are excluded?

Activities related to the arts, soft sciences, sales, marketing, general and administrative, training, market research, funded research, or research conducted outside of the U.S. does not qualify for the R&D Tax Credit. 

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How much is this going to cost me?

STRIKE Tax works on a success-based fee structure. STRIKE Tax does not get paid until our client utilizes the tax credits or receives a cash refund from the IRS and/or state. 

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