Utah Business

Everyone can benefit from these tax tricks.

Our experts at Squire discuss potential tax savings that ordinary citizens and business owners may qualify for in 2022.

Not your average tax savings: Don’t miss out on what has been hiding in plain sight

Our experts at Squire discuss potential tax savings that ordinary citizens and business owners may qualify for in 2022.

We’ve all heard the phrase, ‘You can’t have your cake and eat it too,’ right? Well, we’re here to tell you that you can, and you’ll never guess how. Surprise – it’s your taxes! The research and development (“R&D”) tax credit remains one of the most powerful yet overlooked tax-saving incentives for companies of all shapes and sizes. When people hear the phrase “research and development,” they immediately picture scientists in their white coats pouring chemicals from one beaker to the next. However, the benefits of the research and development tax credit expand far beyond this stereotype.  

Made permanent in 2015, the R&D tax credit allows taxpayers to take a dollar-for-dollar tax credit in addition to having already taken a tax deduction for their qualifying R&D expenditures. Generally, that tax credit equals approximately 6-8 percent of the qualifying R&D spend during the tax year. For example,  if a taxpayer spent $500,000 as qualified R&D expenses, they could not only deduct the $500,000 of expenses against their income for the year but also potentially claim a dollar-for-dollar tax credit of up to $40,000 to utilize against their respective tax liability. Don’t have any tax liability in the tax year to offset? No problem! R&D credits that are not utilized are carried forward 20 years to offset future tax liability. Even better, many start-up companies don’t need to wait and can utilize the R&D tax credit against the company’s payroll taxes and put money back in their pockets today. 

Here are just a few examples of activities that could qualify for the R&D tax credit: 

– Developing a new product or formula 

– Architects & engineers developing new or improved designs 

– Designing a new or improved manufacturing process 

– Software coding and programming 

– Drug development 

– The list goes on… 

Not only is the credit available for the current tax year, but the window of opportunity may still be open for past years as well. As such, don’t waste any more time and reach out to our tax professionals today to see if you could join the thousands of taxpayers that we’ve helped find savings through the R&D tax credit.

Joe Spilner is a tax partner at Squire and Company, PC.