Contact Us

Research &
Development
Tax Credits

Fueling Innovation

Are you maximizing the potential of R&D tax credits? We will take a close look at operations and uncover missed opportunities to lower your tax liability.

Proven Solutions

Overview

Research & Development Tax Credit

R&D tax credits are often overlooked or under-utilized dollar-for-dollar tax savings that directly reduce a company’s tax liability and/or offset payroll taxes. The R&D credit is available at both the federal and state level, with approximately 40 states offering an R&D credit to offset state tax liability.

Claiming R&D Tax Credits can be complex, as documentation is required to demonstrate how the underlying activities meet the four part test, federal and state tax laws and regulations are ever-changing, and a thorough review of the qualifying activities is required to determine eligibility. In some cases, companies can look back to all open tax years to claim missed R&D tax credit opportunities

At MGO, our dedicated R&D Tax Credit team brings over 30 years of experience. We will take a holistic view of your operations and research and development processes to identify areas where the R&D credit may apply.

R&D Tax Credit Criteria

Regardless of industry, companies are potentially eligible to save up to 15 percent of qualified research expenses if their activities meet the following requirements, known as the four-part test:

  1. Qualified Purpose

The purpose of the activity must relate to a new or improved product or process, formulation, invention, software or technique that results in increased performance, function, reliability, or quality.

  1. Technological in Nature

The activity fundamentally relies on a hard sciences, such as engineering, physics, chemistry, biology, or computer science.

  1. Technical Uncertainty

There must be uncertainty concerning the capability to develop, method of developing, or appropriate design of a new or improved product or process at the outset of the project.

  1. Process of Experimentation

Substantially all of the activities are undertaken to eliminate or resolve technical uncertainty. This process involves an evaluation of one or more alternatives and is performed through modeling, simulation, systematic trial and error, or other methods.

Qualifying R&D Expenses

Costs related to R&D activities may be eligible to be expensed immediately to reduce overall tax liability. Qualified R&D costs can potentially include the following four categories:

  1. Wages

W-2 taxable wages for employees involved in the R&D process.

  1. Supplies

Supplies used to conduct research may qualify.

  1. Contract Research

Certain subcontractor expenses may qualify, contractual limitations apply.

  1. Computer Rental/Lease Costs

This could also include payments made to cloud service providers if payments are related to hosting new or improved software.

Ideas & Insights

Insights for a changing world

Clear, actionable insights are often the key to staying ahead of the competition – mitigating risks, maximizing operational performance, fueling sustainable growth.

Discover what our thought leaders are saying about the topics our clients care about most.

01
R&D Tax Credits

Are You Maximizing R&D Tax Credit Benefits?

The Research and Development (R&D) tax credit is a commonly underutilized, yet powerful, tax incentive available to substantially reduce tax liability…

02
Tax Alert

Year-End Tax Savings Strategies for Businesses

Whether your business is in recovery or planning for growth, these year-end tax strategies could help your business start off 2021 on the right track…

03
WEBINAR SERIES

Beyond COVID-19: Maximizing Value from the CARES ACT

Millions of dollars of COVID-19 emergency relief has been made available through the CARES Act and other legislation, some of which is eligible for 100%…

04
Real Estate Tax Alert

Fast Answers on Opportunity Zone Incentives

Simply stated, the opportunity zone statute allows for the deferral of capital gains if some or all of the gain is invested in a Qualified Opportunity Fund…

05
TAX ALERT

IRS Provides Relief to Qualified Opportunity Funds and Investors

The IRS has extended certain deadlines and provided flexibility to Qualified Opportunity Funds (QOFs) in the wake of the COVID-19 pandemic…

Tax Credits & Incentives

How can we help?

Every day we help organizations uncover opportunities to reduce their tax liability and reinvest in their businesses. How can we help your organization?