The term “research and development” is broad and includes creating or improving a manufacturing process, developing or improving a product, developing computer software, etc. While not an exhaustive list, here are a few R&D activities that generally qualify for the federal tax credit:
Developing, modifying, designing, supporting, or supervising research activities for:
- New or improved products, manufacturing processes, formulations, or systems
- Internal software solutions or applications
- Prototypes or pilot models
- Product and material alternatives and substitutions
- Technology transfers
The eligibility & documentation process
The eligibility and documentation requirements involved in producing an R&D study can be a significant undertaking. Because of the penalties for inaccurate filings, claiming the federal R&D tax credit can be costly if the eligible research activities and expenses are not properly qualified and documented. Yet, with access to wage and payroll information and with guidance from experienced tax professionals, your company can assemble the documentation needed to help claim and substantiate the federal R&D credit.
How ADP® and KPMG can help you
ADP and KPMG LLP (KPMG)—the U.S. tax, audit, and advisory firm— can provide a thorough R&D study and assemble the supporting documentation needed to help capture the federal R&D credits your company may be eligible to claim.
Because wage information is required to complete any assessment of R&D activity, ADP can help you make the identification and documentation of qualified R&D costs and activities more efficient and effective.
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