R&D Tax Credits in Kansas
Can I Claim R&D Tax Credits in Kansas?
Yes, you can claim R&D tax credits in Kansas. The state offers a research and development tax credit program known as the Credit Against Tax for Certain Research and Development Activity Expenditures.
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The Research and Development Tax Credit (R&D) is a tax credit available to businesses of all sizes that engage in research and development activities in the United States. This credit is applicable to a diverse range of industries and companies, going beyond traditional research laboratories and scientists. The R&D tax credit was designed to encourage research and development endeavors conducted in the United States. The number of companies benefiting from this tax credit increases every year. Moreover, the Protecting Americans from Tax Hikes (PATH) Act, enacted in 2015, not only made the R&D tax credits permanent but also expanded the eligibility to include startups.
What are the Potential Benefits of the R&D Tax Credit?
When an eligible company takes advantage of R&D tax credits, it can achieve significant cost savings. These benefits include:
- Increasing Cash Flow
- Federal and State Dollar-for-Dollar Income Tax Reduction
- Claim Credits for Open Tax Years Going Back 3-4 Years
- Reducing Your Tax Rate
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Who Can Claim the R&D Tax Credit?
The misconception that R&D tax credits are only applicable to scientists or those producing groundbreaking products is incorrect. The scope of R&D credits is much broader and more extensive than commonly believed.
Companies of any size and in various industries can meet the requirements set by the federal government for qualified innovative activities, making them eligible to claim Research and Development (R&D) Tax Credits. However, numerous businesses are unaware of their eligibility and are missing out on substantial federal and state R&D tax credits. Don't let valuable opportunities go to waste – ensure your company takes advantage of the considerable benefits available.
The same activities that qualify for the R&D tax credit are the ones fueling your business's growth.
- Developed new products
- Improved existing products
- Developed software for internal or external use
- Improved manufacturing processes
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The activities that qualify for the Kansas R&D tax credit are the same ones driving growth in your business.
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How Do I Claim the R&D Tax Credit?
Companies can claim up to 7-10% of their qualified expenses as a federal R&D tax credit. For instance, a software developer, engineer, or lab technician earning a W2 salary of $100,000 a year can potentially save up to $10,000 in taxes.
Qualified research expenses in your company usually comprise employee compensation, materials, and contracted services. To back up these expenses, you can provide different types of documentation such as payroll records, financial records reflecting supply or contract research expenses, and vendor invoices.
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