Why it’s important you know about the R&D creditBy: National Association of Tax Professionals
November 29, 2023

By identifying eligible research and development (R&D) activities and expenses, you can optimize tax returns and secure significant tax savings for your clients. Accurate knowledge of the credit regulations will ensure your clients fully benefit from available tax incentives while fostering innovation and competitiveness in their industries.

Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you’ll have access to the full recording and the entire list of Q&As.   

Q: When a sole proprietorship becomes a C corporation, do we look at the sole proprietorship’s prior two years when determining whether a C corporation is in its first year?

A: You would include the two years it was a sole proprietorship before it became a C corp.

Q: Can a company receive both the employee retention credit (ERC) and the R&D credit based on the same wages paid, or do they need to pick one?

A: An employer can’t claim both credits using the same wages.

Q: How many years do we amortize the research costs in 2022?

A: Companies must spread their deductions for R&D expenses over five years for domestic R&D. It’s 15 years for foreign R&D.

Q: For the payroll tax credit option, what if your gross receipts are zero?

A: You can still apply the credit against the employer’s portion of the Social Security and Medicare tax payment (up to a total of $250,000).

To learn more about helping clients claim the research and development (R&D) credit, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial at natptax.com/explore. 

R&D credits
Tax education
Business tax
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penAbout National Association of Tax Professionals

The National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.

The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.

Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.

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