Article
R&D tax credits: How to navigate the claims process step by step
April 15, 2021 · Updated July 10, 2025 · Authored by Travis Riley
The R&D tax credit can provide reliable opportunities for businesses to reduce income tax liabilities — often saving companies hundreds of thousands of dollars.
Many companies, however, don’t take advantage of the R&D tax credit because of common misconceptions that cause them to assume they’re not eligible or that it’s an overly complicated process not worth pursuing.
Below we outline eligibility requirements for businesses and how you can confidently navigate the claims process.
Overview: What is the R&D tax credit?
The R&D tax credit is available to businesses that develop new or improved products or processes that result in a new or improved function, performance, reliability, or quality.
Tax refunds can exceed 10% of annual R&D costs for federal credits and even higher when applying state-level credits.
R&D tax credit four-part test
To be eligible for the credit, R&D activities must meet IRS criteria known as the four-part test to:
- Demonstrate you’ve attempted to eliminate uncertainty about the development
- Establish you underwent a process capable of evaluating alternatives
- Prove your experimentation relies on science
- Demonstrate the research intended to create a new or improved business component
What happens during the R&D tax credits claims process?
Completing the steps to pass the four-part test may sound overwhelming and can drain precious time and resources should your business pursue it on your own. Claiming credits incorrectly can also result in the loss of credit and possibly penalties from the IRS.
Seeking guidance from an experienced tax professional, however, can help streamline the process so you submit claims with thorough documentation covering all areas of concern.
Collaborating closely with your team, our professionals can guide you through the following steps.
What documentation is required to claim the R&D tax credit?
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.