While the past few years have not been particularly positive when it came to R&D spending by businesses in the US, the outlook for 2014 and beyond looks brighter indeed. According to the National Science Foundation, the overall spending when it comes to research & development in the country should increase this year and in the near future.

In the report introduced by the NSF in December of 2013, it was shown that there was an improvement of 5% in overall R&D spending as of 2011, which then amounted to a total of 428 billion dollars. As of 2012, the number rose to 5.7 percent, amounting to a total of 452 billion dollars. The report shows a vast improvement from the years 2009 as well as 2010, when the research & development activities of different companies were at an all time low.

There can be many reasons attributed to this rise in R&D spending by companies in the US, and we can speculate that one of these reasons is the revamping of the R&D regulations and incentives. States like Texas have recently reinstated their R&D tax credits and incentives, therefore encouraging companies based in or operating within the state to increase their R&D activities. These kinds of changes have all added up to a more robust forecast for R&D activities in the coming years.

Where the US stands globally

The US government understands the importance of R&D activities as a drive for growth and innovation. With an improvement in the country’s R&D activities, both in the public and private sector, the US can remain competitive on the world stage. In fact, the US federal government is expected to set aside approximately 123 billion dollars for R&D funding this year alone. This is a 1.5% increase from previous years, which indeed bodes well for many companies already engaged in R&D activities or those planning to immerse their enterprises in R&D. All in all, the US still remains the largest R&D investor in the world today.

How your enterprise can benefit

It has long been known that the pharmaceutical industry has always been a big player in research & development in the US. But other companies from different industries can also benefit from the government’s R&D incentives, as long as they have been proven to incur expenses which are related to qualified research & development activities.

Each state also has its own form of R&D incentive, so companies operating in or based within a particular state would need to know what these credits and incentives are. Although there may be some kind of ‘gray area’ as to what qualifies as R&D spending (for instance, what the difference is between a prototype and a production model, or what constitutes an experimental process), the changes set forth by the government should make these ‘gray areas’ clearer. This is to avoid any disputes in the future.

Some companies which are now engaged in a dispute with the government regarding their R&D claims often become confused because of uncertainty regarding documentation and cost deduction. However, companies can avoid this confusion (and any resulting case or dispute) by making it a point to confer with expert R&D tax specialists before they begin with their R&D plans and activities. If you would like to benefit from the government’s revamped R&D tax credit and incentives, contact the specialists at Swanson Reed today.

Recently, there have been particular changes to the research & development tax credit and incentive system in the United States. Some states, like Texas, which did not have a proper R&D incentive program, have recently begun offering this once again, and there have been other changes brought about by the government to the R&D tax credit and incentive system that strive to make the process and documentation clearer and easier to understand than ever before.

But there is one misconception about R&D tax credit and incentives which has hampered many companies from taking advantage of this program: the misconception that claiming tax relief is difficult, especially when it comes to dealing with the IRS.

While it may be true in some cases that the IRS has rejected a company’s R&D tax credit and incentive claims, there may be varied reasons for this. But a company wanting to engage in R&D activities need not be daunted by the role of the IRS if they know that they have properly qualified according to the terms set by the government and their respective state.

R&D tax credits and tax planning: what is the relationship?

Research & development tax credits and incentives is a program developed by the government to support enterprises which aim to expand and improve their products and services through research & development activities. If a company can prove that it has incurred expenses which fall under qualified research, then it may claim R&D tax credits and incentives.

While some corporations may be involved in aggressive planning for their taxes in order to circumvent their tax responsibilities, a majority of corporations are not engaged in this type of tax maneuver at all. Tax planning which may be considered aggressive is when a company tries to look for a good tax position which may include certain strategies such as setting up accounts offshore and looking for tax shelters. But the good news is – the aggressive planning of taxes is not even related to what you can claim from your research & development activities.

While the regulations of the IRS may not always be at par with a company’s own, sometimes making it difficult for a company to claim tax credit and incentives, companies can always seek assistance from professional R&D tax specialists which can guide them through the entire process and make sure that they can effectively claim R&D credits without being rejected by the IRS and without having to develop aggressive tax strategies.

Why it pays to take advantage of the government’s research & development tax credits

For any company, big or small, start-up or long-established, it always pays to know how you can benefit from R&D credits. Why? Because it can help your enterprise grow and expand as well as keep up with an increasingly competitive world. With R&D tax credits, you can benefit from tax relief which allows your enterprise to save thousands every year.

With expert help, you can easily learn how your company can qualify for R&D tax credits in the US. The R&D tax credit specialists at Swanson Reed have years of experience under their belt – talk to them today and find out how your company can benefit from this program.