If you’re a small business owner in Texas, you may not be aware of the texas R&D tax credit. This tax credit can provide significant savings for businesses that engage in qualified research and development activities. We know what you’re thinking – I don’t really invest in R&D. But you might have spent money that qualifies without even knowing it!
That’s why we’re here to address this topic today.
In this article, we will explain what the texas R&D tax credit is and how you can claim it. We’ll also provide some tips to help you get the most out of this valuable credit! Towards the end, we’ll give you the next steps on claiming your credit and earning back that money you’ve invested so you can continue to grow your operation. Let’s dive in.
What Is The Texas R&D Tax Credit?
The texas R&D tax credit is a state-level tax credit that is available to businesses that engage in qualified research and development activities. To be eligible for the credit, businesses must have less than $15 million in gross receipts. The credit can be applied against the texas franchise tax, which is a tax imposed on business entities.
It’s important to note that only qualified expenses can count towards your credit. Qualified expenses include things like wages paid to employees who are engaged in research and development activities, costs associated with prototypes and testing, and more. For a full list of qualified expenses, you can check out the texas comptroller’s website. Here are a few more examples of qualified expenses under the state of Texas research and development standards:
- Wages paid to employees who are engaged in research and development activities;
- Costs associated with prototypes and testing;
- Supplies used in the research and development process;
- Utilities used for the benefit of research and development activities;
- Contract services related to research and development, including labor performed by independent contractors or consultants;
Now – let’s talk about what type of businesses can actually claim the research and development tax credit in the great state of Texas.
What Types Of Businesses Can Claim The Texas R&D Tax Credit?
The texas R&D tax credit is available to a wide variety of businesses, including manufacturing businesses, software development companies, biotechnology firms, and more.
If your business engages in qualified research and development activities, you may be eligible for the credit. No matter your industry, this is something worth looking into. But first, let’s talk about how much money you can expect to earn back.
How Much Money Can Be Earned Back Through The Texas Research and Development Tax Credit?
The texas R&D tax credit can give your business up to $250,000 back each year. That is a significant amount of money that can be used to reinvest in your company or cover other expenses. Keep in mind that this is dependent on the amount of money you invested into research and development – it is not a one size fits all answer.
Now, you might be wondering – what are the stipulations and limitations of the tax credit in Texas? Compared to other states, there aren’t that many. However, the credit is non-refundable, which means that it can only be used to offset taxes that are owed. It cannot be refunded if the business does not owe any taxes. Additionally, the credit can only be applied to texas franchise tax – it cannot be used for other taxes, such as federal income tax or property tax.
The texas R&D tax credit can be carried forward for up to five years. So, if your business doesn’t owe taxes in the year that you incur the expenses, you can carry the credit forward to future years. Additionally, the texas R&D tax credit can be claimed retroactively for up to three years. This means that if you didn’t know about the credit or didn’t claim it in previous years, you can still go back and get the money that your business is owed.
To claim the texas R&D tax credit, businesses must file Form 05-169 with the texas comptroller’s office. This form must be filed annually, and businesses must keep documentation of their expenses in order to claim the credit. With all this said, you’re probably wondering – how can I claim the credit for my own business?
How Do I Claim The Texas R&D Tax Credit For My Business?
If you think your business may be eligible for the texas R&D tax credit, the first step is to speak with your accountant or tax advisor. They will be able to help you determine if you qualify and how to claim the credit. We understand that finding the right advice can be overwhelming in and of itself. That’s where we come in. Keep reading to learn how the Tier Group helps you get back that money you’re owed.
Ready To Get Started? Here Is How We Help You Earn Your Tax Credit Back Fast
At the Tier Group, we’re passionate about helping small businesses earn the same tax benefits as the big corporations. We work in a wide range of industries – whether you’re looking for a software development tax credit or an R&D tax credit for dentists. We can even help with a construction tax credit, food and beverage tax credit, and much, much more. With an average recovery of over $100k, you have nothing to lose by reaching out for a free consultation! Here’s how it works:
Start by reaching out and filling out our questionnaire so we can learn more about you and your business. We’ll take down your information and schedule a time to learn more. At that point, we’ll be able to pair you up with one of our licensed tax consultants who specializes in your industry. They’ll help you determine if you qualify for the Texas r&d credit, and how much you may be able to earn back.
So, what are you waiting for? Reach out today and get the process started – it’s time you earned back the money you invested so you can continue to stay on the cutting edge of your industry!