THE APRIL 18TH TAX DEADLINE IS APPROACHING FAST
DON'T FORGET TO CLAIM YOUR R&D TAX CREDIT! BOOK A CALL TODAY
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ATTENTION: THE APRIL 18TH TAX DEADLINE IS APPROACHING FAST - DON'T FORGET TO CLAIM YOUR R&D TAX CREDIT!
BOOK A CALL TODAYLearn all about R&D tax credits and how you can save your clients money in this insightful webinar course What Are R&D Tax Credits: An Intro For Accountants & Advisors presented by CPA Academy and hosted by Stephen Yarbrough, co-founder and Chief Tax Officer of Neo.Tax.
Take this free course and any one of the numerous courses available on cpaacademy.org to earn CPE credits.
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Accuracy, supported by quantifiable data, will become even more essential for those filing for the R&D credit. Luckily, Neo.Tax’s automated filing LLM connects directly to your project-management and payroll & GL software to create a data-backed filing that already meets the proposed higher IRS standard. And best of all, you can be confident that your R&D credit filing is backed by contemporaneous data and audit-ready.
In September 2023, the IRS released information about their proposed changes to Form 6765, the “Credit for Increasing Research Activities”, which businesses must file when claiming their Federal R&D Tax Credit.
The proposed form asks for more detailed accounting of your qualified expenses, which will make the process of filing even more time-consuming and stringent. A newly introduced Section E will feature five questions, while the proposed Section F will require taxpayers to report both quantitative and qualitative information for each qualified business component.
This kind of granular information used to only be required by the IRS during an audit; this change would mean that tax strategy and the collection of internal data will be all the more pressing for innovative businesses who plan to claim the hugely advantageous R&D credit they’re entitled to.
We'll dive into the specifics of what you'll need to collect, collate, and share in order to file for an R&D credit should the proposed form be adopted, but the big takeaway is this: accuracy, supported by quantifiable data, has become essential for those filing for the R&D credit.
Luckily, Neo.Tax’s automated filing LLM connects directly to your project-management and payroll & GL software to create a data-backed filing that already meets the proposed higher IRS standard. And best of all, you can be confident that your R&D credit filing is backed by contemporaneous data and audit-ready.
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Here’s what you’ll need to report in the newly added Section E and Section F should the proposed form be adopted:
Section E
You must include the amount of:
And you must answer whether you:
Section F
In Section F, you’d need to provide the controlled group member’s name, employee identification number, and principal business activity code as well as the following information for each business component (in all likelihood, this information would be a substantial attachment, similar to the R&D Tax Credit Study that Neo.Tax already automatically creates for taxpayers):
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For controllers, accountants, or Heads of Tax attempting to file R&D credits the old-fashioned way, this change will add countless hours and may lead to an entirely new methodology of how QREs are identified and collected throughout the tax year. But, for those ready to simplify the process, just get in touch with a tax expert at Neo.Tax.
We’ve used machine learning to streamline the process, replacing After-the-Fact Interviews with calculations based on Contemporaneous Data, just as the IRS prescribes. The R&D credit is a hugely valuable tool to incentivize innovation; we’ve innovated the way you can claim it.
March 8, 2024
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On February 21, the Tax Executives Institute and Thomson Reuters are holding a live webinar entitled “Section 174: What We Know Now.” The in-depth presentation, which starts at 2pm ET, will provide expert guidance into how best to strategize around tax treatment of R&D expenditures as they currently stand under Section 174.
On February 21, the Tax Executives Institute and Thomson Reuters are holding a live webinar entitled “Section 174: What We Know Now.” The in-depth presentation, which starts at 2pm ET, will provide expert guidance into how best to strategize around tax treatment of R&D expenditures as they currently stand under Section 174.
All this year, we at Neo.Tax have been banging the drum about the massive impact that the Section 174 change would have on innovative businesses. That’s why our partners at TR have invited Neo.Tax CEO Ibrahim to be one of the Section 174 expert presenters at the webinar.
Section 174 has changed the landscape for American business taxes — it’s important to understand the new terrain!
So, register for the webinar today.
Learning Objectives: Upon completion of this webinar, attendees will be able to:
Presenters:
February 15, 2024
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The Tax Relief for American Families and Workers Act of 2024 passed in the House by a vote of 357 to 70 on Wednesday. The bill will help restore much of the Covid-Era Child Tax Credit and will rewrite part of the Trump-Era change to R&D Taxes that had made domestic R&D costs prohibitively expensive for innovative American companies. Whether the Senate approves the bill remains up in the air.
Yesterday, the House voted 357 to 70 to pass the Tax Relief for American Families and Workers Act of 2024. The bill is the long-rumored compromise to restore both the R&D Tax Credit to its original, pre-Tax Cuts and Jobs Act form and the Child Tax Credit, which was implemented during Covid to help working families.
As CBS News explained it: "The legislation would make it easier for more families to qualify for the Child Tax Credit, while increasing the amount from $1,600 per child to $1,800 in 2023, $1,900 in 2024 and $2,000 in 2025. It would also adjust the limit in future years to account for inflation. When in full effect, it could lift at least half a million children out of poverty, according to the Center on Budget and Policy Priorities."
And for innovative companies, the restoration of the pre-TCJA R&D Credit is also massive news. The TCJA had changed the cost-benefit analysis for research-minded American companies both big and small when it came to building innovative products. By creating aspects of R&D that had to be amortized rather than deducted in the same year, the cost of research and development rose exponentially. (Read our Founder's Guide to R&D Capitalization to get a better sense of how the profitability analysis has shifted.)
The new law keeps the provision from the TCJA that makes it so R&D costs incurred outside the United States must be amortized over 15 years. However, if this law passes the Senate: "The provision delays the date when taxpayers must begin deducting their domestic research or experimental costs over a five-year period until taxable years beginning after December 31, 2025. Therefore, taxpayers may deduct currently domestic research or experimental costs that are paid or incurred in tax years beginning after December 31, 2021, and before January 1, 2026."
By restoring the domestic R&D Tax Credit to its earlier form, where R&D costs can be deducted rather than capitalized, American companies are once again incentivized by business tax law to create new, game-changing products.
It's still up in the air whether the Senate will approve the Tax Relief for American Families and Workers Act of 2024, but we'll let you know as soon as a decision is made.
February 1, 2024
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