Remaining competitive in an ever changing global environment while maintaining or increasing the firm’s professional reputation and prestige drives architects and engineers to continuously develop new and improved designs, concepts and processes. Architectural and engineering firms generally perform these development and improvement processes on a regular basis. However, the cost of this constant development may be restrictive. In order to help mitigate these costs and maintain global market competitiveness, federal and state governments provide incentives in the form of tax credits. The most powerful of these tax incentives is the federal tax credit for increasing research and development expenditures (the R&D credit).
There are four criteria – the four-part test - that are considered when qualifying R&D activities. Each activity must meet the four-part test in order to include the associated taxable salaries and wages, supplies, and/or contract research in the calculation of the tax credit. These activities must only be evolutionary to your company, not revolutionary to the industry.
Examples of qualified research activities for architectural and engineering firms can include:
The federal R&D tax credit can provide a powerful monetary incentive for architectural and engineering firms that perform R&D activities. The additional cash flow generated by the R&D credit can be the difference between success and failure.
Our dedicated R&D professionals can help you make the most of your R&D investments. While minimizing the disruption to day-to-day operations, we conduct a thorough review of your R&D activities and identify the credits available to you. To bring you the highest quality R&D services, we first determine if a tax credit study is right for your organization. If so, we will:
For more information on this topic, or to learn how Baker Tilly tax specialists can help, contact our team.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.