THE APRIL 18TH TAX DEADLINE IS APPROACHING FAST
DON'T FORGET TO CLAIM YOUR R&D TAX CREDIT! BOOK A CALL TODAY
ATTENTION: THE APRIL 18TH TAX DEADLINE IS APPROACHING FAST - DON'T FORGET TO CLAIM YOUR R&D TAX CREDIT!BOOK A CALL TODAY
You guys have the sickest value prop ever. You basically give companies free money. Startups need that now more than ever!
Enacted in 1981 to encourage research and development (R&D) activities in the United States, the R&D tax credit reduces tax liability for organizations that perform certain activities to develop new or improved products, processes, software, techniques, formulas or inventions.
You can get about 10% back on qualifying expenses such as wages, contractor costs, cloud hosting and infrastructure, supplies, and legal costs.
umm.. are you a startup?
Because of the broad definition for qualified activities, businesses from almost every industry have claimed R&D tax credits. If you have employees or contractors in the United States who spend any time developing new or improved products, processes, software, algorithms, formulas, or inventions, then you likely qualify for the R&D tax credit.
You can get about 10% back on qualifying expenses such as wages, contractor costs, hosting and infrastructure, and supplies. You can receive up to $250k per year for up to 5 years - that is $1.25M!
I was blown away by how easy neo.tax was. This was an enormous pain last year, even with the well-known firm that we used.
We are the only company that helps you handle R&D capitalization together with the R&D credit. Our technology makes the R&D credit process both fast and rigorous so you get the best tax outcome without overpaying.
We're not profitable, but we're going to owe taxes anyway. Thanks to Neo.Tax, we got money instead of paying it!
Even if your company does not owe any income taxes, you can claim the R&D tax credit to reduce your payroll taxes, as long as your business earned less than $5 million in revenue in the credit year, and did not earn any revenue or interest income in any year preceding the 5 year period ending with the credit.
The R&D tax credit is available to companies developing new or improved business components, including products, processes, computer software, techniques, formulas or inventions, that result in new or improved functionality, performance, reliability, or quality. It’s available at the federal and state level, with over 30 states offering a credit to offset state tax liability.
It’s a dollar-for-dollar tax savings that directly reduces a company’s tax liability. There’s no limitation on the amount of expenses and credit that can be claimed each year. If the federal R&D credit can’t be used immediately or completely, then any unused credit can be carried back one year or carried forward for up to 20 years. Each state has its own carryover rules.
The R&D tax credit regularly provides a wide range of businesses with a source of extra cash—up to 10% of annual R&D costs for federal purposes and much more when state credits are factored in.
The R&D Payroll Credit was created by The Protecting Americans from Tax Hikes (PATH) Act of 2015, which made the R&D credit permanent and expanded its application to create a potential tax benefit for small businesses and start-up companies.
Start-up companies and small businesses may be eligible to apply up to $1.25 million—or $250,000 each year for up to five years—of the federal R&D credit to offset the Federal Insurance Contributions Act (FICA) portion of their payroll taxes each year.
To be eligible, a company must meet two requirements:
The R&D credit is calculated on the federal income tax return as usual and may be applied against payroll taxes starting the quarter after the credit is elected. For calendar-year taxpayers, the R&D credit can be applied against payroll taxes as early as April of the following year.
We're a technology company, so almost all of our expenses -- except for go to market spend -- qualified for the credit. Add that all up. we got 10% of that as a check in the mail.
You can claim the following expenses for qualified activities:
The payroll-tax offset allows companies to receive a benefit for research activities even if they aren’t profitable.
To be eligible for the credit, companies must meet the following qualifications:
No. The criteria for qualified research activities and expenses is very broad, and certain types of companies (i.e. software, hardware, science, construction, beauty, startups, etc.) are extremely likely to qualify for at least some amount of credit.
Additionally, your projects do not need to succeed in order to qualify. Even if a project fails or is put on hold, you can still claim project expenses if they meet the criteria for qualified research.
The credit showed up in Gusto and was applied to our next payroll.
The payroll-tax offset is currently available for qualified expenses incurred during the prior tax year. The R&D credit must be calculated and shown on a taxpayer’s federal income tax return with the portion of the credit applied to offset payroll taxes identified and elected when the original tax return is filed.
The offset is then available on a quarterly basis beginning in the first calendar quarter after a taxpayer files their federal income tax return. For example, if you file for the credit in Q1, you will receive a credit to offset your payroll taxes beginning in Q2, and for every quarter until the credit has been fully consumed. However, the exact timing and method of payment depends on your payroll provider.
It needs to be submitted along with your annual corporate tax filing and you need to file:
Each state will have its own form if it offers a state R&D tax credit program. If you qualify for the payroll tax offset, you will need to make sure you account for it on Form 941, Employer’s Quarterly Federal Tax Return. You will also need to fill out and attach Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities Documentation requirements as stated in I.R.C. § 41
Neo.Tax integrated smoothly with our existing CPA, making the entire experience seamless for everyone.
That is great! When your claim is complete we can send access to your forms to just you or also include your accountant, along with filing instructions. We are always happy to jump on a call with your accountant as well to answer any questions they may have.
You shouldn't think about *under reporting* any credits because that's just as fraudulent as overreporting.the irs cares that you *accurately* report everything, and that's exactly what neo.tax does.this is a bit extreme, but we've seen accountants getting sued for malpracticebecause they *didnt include* the r&d credit.
As long as your filing does not contain errors, you are guaranteed to receive a credit based on the expenses you claimed. However, the IRS may request documentation to prove that your expenses meet the criteria for qualified research.
Many businesses miss out on R&D credits that they are entitled to because they are afraid of being audited. It’s important to note that claiming an R&D tax credit will not increase your chances of being audited. In fact, the credit is so beneficial that it would be unusual for certain types of companies (i.e. software, hardware, beauty, startups, etc.) to not claim the credit.
We haven't had a single Neo.Tax customer audited yet, and if it ever happens, they know we have their back
We make sure your R&D Tax Credit is super kosher and transparent so that even if the IRS disagrees with the amount of your credit, they won’t charge you penalties or interest, just the difference in calculation. Plus, we provide a study with your tax forms that our team of tax specialists pre-audits before sending to you.
We got the most bulletproof documentation ever from Neo.Tax
If you are audited, the IRS will request documentation to prove that your expenses meet the criteria for qualified research. If you use our platform to create your claim, then in addition to providing the documents required to file the claim, we will also provide a write-up to help substantiate your eligibility to the IRS if audited.
When an audit occurs, you can use your own testimony as evidence, but the IRS strongly prefers contemporaneous documentation. This refers to time-stamped documentation that is generated at the time that expenses are incurred, and as R&D work is being done. Examples include timesheets, meeting minutes, calendar events, and invoices. We recommend gathering as much documentation as possible to help defend your claim in the event of an IRS audit.
Our top 10 accounting firm did their best to poke holes in the work that Neo.Tax did and they couldn't find a single issue. i felt like i could hear 'eye of the tiger' playing towards the end.
Our R&D credit study establishes your credit claim. It’s designed by a former IRS agent and our team reviews each one for quality and robustness. The more information and documentation you give us about your R&D projects, the stronger the study.
Neo.Tax's pricing model was the only one in the marketplace that aligned our return with their fees. All the other CPAs charged by the hour and had a minimum, even if we didn't end up qualifying for the credit.
Our fee is 2% of the total qualifying R&D expenses we find and claim for you. This is roughly 20% of the total tax credit you receive. Why do we charge based on your expenses and not your credit? According to the IRS, a fee based on inputs (your qualifying expenses) is ok, but a fee based on outcome (your credit amount) is dangerously close to a “contingent fee” which is expressly disallowed by IRS regulations.
No upfront commitment.
You won’t pay anything until you receive everything you need to file.
Fee includes all required forms as well as your personalized R&D study.
Flexible Payment options: Credit Card or ACH.
Neo.Tax did what was best for my startup, even when it didn't make sense for Neo.Tax.
No. We’re focused on getting you the best outcome for your business over the long run, not the largest fee for us this month. That’s why we’re the only company that helps you manage your overall tax situation factoring in both the credit and capitalization.
At Neo.Tax, they ship truly brilliant products! It’s easy to use and scale, and is really handy to customise for any projects.
I hope at some point, you can do this for taxes. If you could take the data we have, and I could just click ‘file taxes’. That's my dream scenario.
Helping companies spend less time and money on painful manual accounting and tax processes