You Don't Have to Work in the Science Field to Claim R&D
When the average person thinks of the Research and Development Tax Credit, they likely imagine scientists in lab coats, working in a lab with test tubes to perfect their latest experiment. However, that’s simply not the case anymore, and companies within various industries are able to take advantage of the R&D tax credit.
R&D Tax Credits were created by the United States Government as an incentive for businesses to take innovative steps to develop or improve their products, processes, and software. While some companies are aware that they can qualify and benefit from the credit, there are many companies that are not taking advantage of their earned credits, simply because they are unaware that they qualify. Read about the R&D Tax Credit, and the different industries that are able to take advantage.
FAQ's Regarding R&D Tax Credits
Q. How can startup companies take advantage of R&D?
A. Startup companies can apply the credit against their payroll tax liabilities, even before they begin to generate a profit on their products, processes, or software.
Q. How do I know if my company qualifies?
A. More companies than ever are able to qualify for R&D tax credits. Since the credit is designed to promote innovation and creativity, if you are performing any type of project that is different, it is highly likely you can qualify.
Q. Why hasn’t my CPA brought this up before?
A. It is a common misconception that only specific, “White Coat” companies within the science and research fields are able to qualify for the credit. However, companies across various industries can, but many aren’t aware of this.
Q. Does my company have to be in a specific industry to qualify?
A. No. Numerous industries are able to qualify for the research and development they’re performing. Qualifying industries include software development, cosmetic, food sciences, oil and gas, web development, construction, and agriculture.
Q. Can R&D credits be claimed for a prior year?
A. Yes. R&D Credits can be claimed for a prior tax year as long as the amended return is filed within three years of the original filing date.
Q. Is it worth my time to claim the R&D credit?
A. Definitely. The R&D Tax Credit remains one of the most valuable incentives offered by the U.S. Government for businesses to remain competitive.
Q. What is the 4-Part Test?
A. The 4-part test, created by the IRS, is the main qualifier that all research activities must pass in order to reap the benefits of this lucrative credit. The 4-part test examines the Nature, Purpose, Process, and uncertainty of the research activities being performed. Learn more about the R&D Tax Credits 4-part test here.
Companies performing unique research activities can qualify for the R&D tax credit. Contact us for a free assessment today.
Understanding the Deductions Hotel Owners are Eligible for
It’s no secret that hotels are known for racking up electricity and power bills due to the vast amount of people they serve, and the 24-hour operations that corresponds with the business. Hotel owners who have included energy-saving elements into their construction plans, or have renovated their buildings to reduce the energy consumption can take advantage of the 179D Energy Efficient Tax Deduction.
Secure Deductions for Being Energy-Efficient
Utilize the 179D Energy Efficient Tax Deduction
Hotel owners who have installed qualifying energy efficient equipment and technology into newly constructed or renovated buildings that have been placed into service between December 31st 2006, and January 1st, 2018 can qualify for the 179D Energy Efficient Tax Deduction. Qualifying hotel owners are able to deduct $0.60 per square foot in each category, allowing for a deduction up to $1.80 per square foot on each qualifying hotel property. If your property only qualifies for one category, you will still receive a $0.60 deduction.
Qualifying Energy Saving Systems Include
Hot water systems - Heat can come from solar, geothermal, hot water generators, tank heaters, or instant tankless hot water heaters.
- Building envelope systems - A building envelope is the physical separator between the conditioned and unconditioned environment of a building which effects the resistance to air, water, heat, light, and noise transfer.
HVAC Systems - The goal of HVAC systems are to provide thermal comfort and acceptable indoor air quality in order to reduce energy consumption.
- Building Insulation - Insulation, including in ceilings, roofs, flooring, and walls, helps reduce the exchange of heat through surfaces within a building, thus reducing the energy consumption of the building.
The National Tax Group Process
- Request of a free assessment of benefits
- Acceptance of proposal
- An on-site inspection of the qualifying property
- Allocation letter is provided if applicable
- Execute IRS complaint building energy models and provide certification
- Documentation of the process in a final report for submission
Earn Big for Taking Energy-Efficient Initiatives
Eligible contractors and home builders can claim up to $2,000 in credits if the residence they’ve worked to construct or renovate meets the energy-efficient threshold. Eligible contractors and builders must own and have a basis in the qualified energy efficient home, and have been in charge at the time of the construction in order to benefit off of the 45L credit.
Thanks to tax provisions set into place by the Tax Cuts and Jobs Act, 45L has been retroactively extended through the 2017 tax year, giving more people the opportunity to claim this lucrative credit. 45L was first made available by the Federal Policy Act of 2005, and has since grown into a lucrative credit. 45L can be claimed by “Eligible Contractors” recognized by the IRS as any Trust, Estate, Partnership, Company, or Corporation that was in charge at the time of construction.
Structures that qualify for the 45L Energy Efficient Home Credit are freestanding single-family homes, townhouses, manufactured homes, condominiums, and apartment units.
FAQs Regarding the 45L Energy Efficient Home Credit
Q. What allows a home to qualify for 45L?
A. The energy consumption of the home must be reduced, meeting the energy-efficiency requirements.
Q. How is it determined if a home qualifies for 45L?
A. An analysis performed by one of our tax-experts will determine if the energy-saving elements installed and incorporated into the home in question qualifies for the credit.
Q. Who can benefit from 45L?
A. Eligible contractors who construct or renovate qualified new energy-efficient homes are able to qualify for the credit.
Q. What form must a builder complete in order to obtain 45L?
A. In order to complete the qualifications for the 45L credit, eligible contractors must complete the IRS form 8908. It can be found on the IRS website: www.irs.gov/pub/irs-pdf/f8908.pdf.
Q. Can a builder certify their own home for the tax credit?
A. No. The IRS rules state that the person who certifies the home must “not be related (within the meaning of 45(e)(4)) to the eligible contractor.” Our tax experts will take care of the certification process for you. Contact us today.
Q. Who can verify homes for the tax credit?
A. The home in question must be inspected and tested by an “eligible certifier”, which National Tax Group is. Contact us today to get inspected.
Q. Can a homeowner apply for 45L?
A. No. Only eligible contractors can apply for the 45L Energy Efficient Home Credit.
Q. The IRS rules state that the tax credit is $2,000 per qualifying dwelling unit. What does the IRS define a dwelling unit as?
A. As defined by the IRS, a dwelling is a “single unit providing complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation.”
Residential properties that are currently under construction, or have undergone renovations to cut energy and power costs, and meet the energy efficient threshold can also benefit from the 45L credit. Contact us today for a free assessment, and start the process of obtaining the 45L tax credit.
Reap significant tax-savings through your personal property assets
Most commercial buildings and facilities are able to benefit from having a cost segregation study performed on their property. Qualifying properties that have been constructed, remodeled, or purchased after 1987 are able to benefit from having a cost segregation study performed.
Retroactive Tax Extensions
Go Back In Time and Benefit From the 2017 Tax Year
The Bipartisan Budget Act, signed into law by President Trump in February 2018, includes over 30 incentives and breaks for taxpayers, including retroactive extensions for the 179D Energy Efficient Tax Deduction, and the 45L Energy Efficient Home Credit. While the qualifying standards for benefitting from these incentives have stayed the same, the Act has extended the incentives to properties and improvements placed into service through December 31st, 2017, which is an entire year past the original date of December 31st, 2016.
Apply Before the Deadline
Reap Your Unclaimed Tax Benefits Now
Although these lucrative energy-efficient incentives have been extended, the Bipartisan Budget Act wasn’t signed into law until 2018, making it impossible for taxpayers to gather the proper documentation and submit it to the IRS in the time permitted for their 2017 tax returns. Taxpayers are now able to file claims and take advantage of retroactive tax breaks from the 2017 tax year through extensions provided by the Act.
If you have filed an extension and have a tax bill due in September, you are able to take advantage of these provisions before the extension deadline on September 15th, 2018.
Building owners, contractors, or architects working on government buildings that have completed any lighting upgrades in the last year can greatly benefit from this extension.
179D Energy Efficient Tax Deduction
- Any commercial property or 4+ story multi-family property
- Property that has been newly constructed prior to December 31st, 2017
- Property with retrofits to lighting, HVAC, or envelope components that result in reduced energy consumption
- Eligible properties qualify for up to $1.80 per square foot, or $0.60 for lightning, HVAC, or envelope benefits
- Commercial building owners and architects are able to reap the benefits of 179D
45L Home Credit
- Single-family or multi-family homes 3 stories or less
- $2,000 tax credits available per qualifying units
- Newly constructed or majorly renovated homes
- Contractors and builders are able to reap the benefits of 45L
Contact National Tax Group Now
The deadline to apply for provisions to the 2017 tax year is September 15th, 2018. Our team of in-house experts and engineers will perform a thorough examination of your efforts and compile an accurate and timely written proposal to be submitted to the Internal Revenue Service.
Don’t let your well deserved tax credits, deductions, and incentives go to waste. Contact us today and start the process of claiming what you deserve.