About the Author
Monika Diehl serves as the VP of Operations for BioOhio member company Clarus R+D in Columbus, Ohio. She is a CPA and holds a Master of Taxation from Capital University Law School. Monika has extensive business tax experience and worked in internal audit earlier in her career. She is passionate about helping businesses use their investment in innovation to reduce the amount of tax they pay.
This year’s tax deadlines have come and gone.
You and your team have been focused on bioscience innovations, making it easy to overlook claiming the R&D tax credit. Either due to lack of awareness, uncertainty over eligibility, or concern about the cost of submitting your claim, you’re now worried about losing thousands of dollars that are rightfully yours.
Don’t despair; your opportunity to take advantage of this benefit has not disappeared. Claims can still be filed via an amended return.
The benefit is significant
Nearly $15 billion in R&D credits were claimed in 2016. For most companies, the credit is worth 7-10% of qualified research expenditures. This is a dollar-for-dollar credit against taxes owed. Plus, it can carry forward 20 years. After being made permanent by the 2015 PATH Act, the credit is here to stay.
When to claim and amend
Standard procedure for claiming an R&D tax credit is to complete the required documentation and submit form 6765 alongside your company’s original filing. It’s not uncommon for companies to either forget – or simply be unaware of – the need to include this form.
Generally, you have at least three years from the date you file your tax return (or from the statutory due date if the return is filed early) to amend your return to correct any errors or include any missing items. Additionally, this three year period can be further extended if you incur net operating losses, make subsequent tax payments, or voluntarily extend the time to assess deficiencies.
Strategically, innovative companies that claim the credit every year will realize the highest return on their investment. Even if unutilized in a given tax year, credits can be carried forward up to 20 years, and, in some cases, recorded as deferred tax assets on your balance sheet.
It’s (almost) never too late to claim
Although it’s too late to claim your 2017 research credit as a payroll tax offset, companies can amend their return to monetize it as an income tax credit – and can even consider performing a ‘look back’ to capture up to three years of unclaimed tax credits.
To find out more about R&D tax credits, or to discuss whether your business qualifies, get in touch with our team at Clarus R+D in Columbus, Ohio. Our technology-driven solution empowers companies to fuel their growth with America’s largest tax incentive.