Claim the R&D tax credit with Pilot
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What is the R&D Tax Credit?
Does your company spend money on research and development in the US? If so, you can be eligible for a large tax credit worth up to $250,000 or more. The R&D credit is put on your company’s future payroll tax obligations once it has received IRS approval.
Businesses in a variety of sectors, including technology, e-commerce, bio-tech, hardware, and more, may be eligible for the R&D credit.
Claim the R&D tax credit, without the headache
By using the R&D credit properly, you might save thousands of dollars. We manage the entire tax claims procedure and offer the supporting evidence required to support your claim with the IRS. We make the R&D tax credit claim process simple despite its complexity and laboriousness.
End-to-end service
We manage the entire R&D tax claim procedure on your behalf. This entails determining the R&D expenses that qualify, submitting the appropriate paperwork, and ensuring that your payroll appropriately applies your credit.
Meticulous documentation
The R&D claim procedure and your documentation are rigorous thanks to our software and team of professionals. We also make sure your accountants, tax preparers, and payroll provider are all working together as a team.
All-in-one support
With BEST TAX SERVICE, you may obtain support for your taxes, R&D credits, and bookkeeping all under one roof. We already have a solid understanding of your financial situation, so we can discover costs quickly and effectively to increase your savings.
Here’s how we streamline the entire process:
We conduct an R&D tax study, which identifies the total amount of qualifying R&D expenses you can claim on its federal tax return.
We prepare and file the necessary tax paperwork to claim the R&D credit, if you use Pilot Tax. Otherwise, we provide the right documentation for your tax preparer to file.
We provide required supporting documentation, which is an important prerequisite in case of an IRS audit.
We work with your payroll provider to apply the R&D credit against your payroll taxes and ensure it's accurate throughout the year. Gusto logo If you use Gusto, we’ve partnered with Gusto to automatically apply the credit, saving you time.
A complicated credit, but simple pricing.
We charge 2% of your total qualifying expenses.
Frequently asked questions
Do I qualify for R&D tax credits?
If your business has less than $5 million in annual revenue, and it’s been less than five (5) years since your first gross receipts/sales, you can frequently reduce your Social Security Payroll tax liability under the PATH Act R&D credit. If you do not qualify under the PATH Act R&D Credit, you can take regular R&D Credit against income taxes (rather than against payroll taxes).
What activities qualify for R&D tax credit?
Qualifying R&D expenses and/or activities are those which pass this four-part test:
- Technical uncertainty. The activity is performed to eliminate technical uncertainty about the development or improvement of a product or process, which includes computer software, techniques, formulas, and inventions.
- Process of experimentation.The activities include some process of experimentation undertaken to eliminate or resolve a technical uncertainty. This process involves an evaluation of alternative solutions or approaches and is performed through modeling, simulation, systematic trial and error, or other methods.
- Technological in nature.The process of experimentation relies on the hard sciences, such as engineering, physics, chemistry, biology, or computer science.
- Qualified purpose.The purpose of the activity must be to create a new or improved product or process, including computer software, that results in increased performance, function, reliability, or quality.
How large will my R&D tax credit be?
Unlimited, if applying the R&D credit against income taxes. These credits can range between 5% and 15% of qualifying R&D costs. If taking the PATH Act R&D credit, a company can receive up to $250k against payroll taxes and take the remainder against income taxes.
As an example, for an unprofitable 5-person tech startup that has less than $5M in annual revenue with roughly 80% of time being spent on qualifying R&D activities, and average salary of $100k/year, the credit might be between $20k to $60k. Pilot’s fee is a small percentage of the total qualifying R&D expense and easily pays for itself by securing the R&D Tax Credit for you.
Can I claim the R&D credit retroactively?
Yes, we can help you file an amended tax return to claim the R&D credit for previously filed Income Tax returns (past 3 years), but you cannot take the PATH Act R&D credit on an amended tax return.
What does Pilot R&D Credit Service include?
We help businesses with all aspects of claiming these R&D Tax Credits. BEST TAX SERVICES will:
- Identify and calculate qualifying R&D expenses
- Prepare Forms 6765, 8974, and 941 to gain IRS approval of credit. If you use BEST TAX, we’ll file on your behalf as well.
- Prepare all required supporting technical and financial documentation, including documentation of research time, R&D payroll expenses, etc. This is an important pre-requisite to support an IRS audit in case that happens.
- Coordinate with your tax preparer, payroll provider, and accountant to ensure your books and taxes are accurate
- Continually ensure the credit is applied correctly against your payroll liabilities
- Email and phone support with R&D credit experts
Does BEST TAX SERVICES support you in case of an audit?
Yes, we can help support you in the case of an audit. For more details, please contact us.
Why is having an R&D study done important?
BEST TAX SERVICES recommends anyone who claims the R&D credit to get a study done. An R&D study determines the total amount the business should claim and collects the necessary documentation to support that claim.
When filing for the R&D tax credit, you must submit the relevant tax forms to the IRS. However, you must also have the technical and financial justification of what you were claiming prepared in case the IRS audits your claim. If the IRS audits the claim and you can’t produce technical and financial evidence behind what you claimed, you will need to return the money and potentially pay a penalty. The R&D Tax program is on the IRS’s “Dirty Dozen List”. Once you’ve been audited, the IRS can also audit your claims for up to 7 years prior – so you need to make sure that each year’s claim has proper and thorough substantiation.
Can I use BEST TAX R&D Credit service without using BEST TAX Tax?
Yes, we’ll calculate the R&D tax credits and provide the necessary documentation for your tax preparer to file. If you use BEST TAX Tax, we’ll take care of the full process and file the necessary tax paperwork on your behalf as well.
Are there state-level R&D tax credits?
33 states currently offer an R&D credit. Generally, the states follow federal guidelines on what constitutes qualified R&D expenditures with few exceptions. BEST TAX will provide guidance on state level credits. For example, the CA R&D credit is non-refundable which means it cannot be taken against payroll tax. Work must be done in CA to be considered qualified and CA credits can carry forward indefinitely until exhausted.
