ENGINEERING
RESEARCH AND DEVELOPMENT TAX INCENTIVES FOR THE ENGINEERING INDUSTRY
The complexity of modern structures often requires a great deal of innovation from the engineers in order to ensure the structures support and resist the loads and forces to which they are subject, whether those forces are related to the intended use of the structure, environmental stresses, or other issues. Engineering firms may not realize that the design and development activities of creating structural, mechanical, and electrical systems for unique buildings and structures may constitute qualified R&D activities, potentially entitling them to significant R&D incentives. If you think you have to be operating in a laboratory to qualify for R&D Tax Credits as defined by the Internal Revenue Code, think again. If your firm is in the engineering industry, there is a strong chance that you could benefit from an R&D Tax Credit study. Let incentAdvise’s engineering experts help you claim the credits that you deserve!
What Qualifies for the R&D Tax Credit in the Engineering Industry?
Types of Research Activities
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Designing and developing cost-effective and innovative operational processes
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Integrating new materials to improve product performance and manufacturing processes
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Determining tooling requirements and optimal placement of equipment
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Evaluating and determining the most efficient flow of material
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Designing and evaluating process alternatives
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Designing, constructing, and testing product prototypes
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Developing processes that would meet increasing regulatory requirements
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Reducing labor costs
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Performing alternative material testing
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Achieving compliance with changing emissions laws and regulations
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Streamlining manufacturing processes through automation
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Increasing manufacturing capabilities and production capacities
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Developing and implementing new or improved safety enhancements
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Developing new applications
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Improving quality
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Implementing new production standards and quality assurance processes
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Improving yields
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Reducing manufacturing times
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Optimizing manufacturing processes
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Increasing operating and economic efficiencies
Qualified Research Expenditures
Wages.
W-2 wages paid to an employee for "qualified services" performed by the employee. Only wages subject to withholding.
Outside Contractors.
Work performed by non-employee / independent contractors. Only 65% of expenses may be eligible.
Supplies.
A taxpayer may claim the research credit for amounts it paid or incurred for supplies used in the conduct of qualified research.
Qualified Research Expenditures
Utilizing the additional funds obtained through their R&D Tax Credit claim, our construction client was able to invest in equipment capable of detecting underground utility lines and other risk mitigation before initiating projects, expanding their company offering.
GROSS RECEIPTS: $1,957,358
GROSS PAYROLL: $962,753
TOTAL R&D CREDIT: $105,497
Examples of activities and innovations eligible for R&D tax incentives include the following:
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Determining alternate materials with which to construct a structure or parts of a structure (must be a new concept to the taxpayer)
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Determining alternate means of assembling and/or fastening component parts of a structure (must be a new concept to the taxpayer)
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Improving acoustical qualities of structure
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Developing alternative water flow / plumbing systems
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Developing alternative electricity conduction systems
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Developing or improving lighting within a structure
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Improving or developing alternative ventilation for a structure
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Improving or determining alternative heating and cooling systems
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Determining alternative structural design
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Developing processes or equipment for the extraction of natural elements from another substance, or the development of processes and equipment to convert the extracted materials
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Developing a pilot plant to investigate the concepts of a model or process
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Ensuring that toxic waste and other waste disposal processes integrated into the structure
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Integrating product and material transportation systems into the functional design of the structure
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Conducting environmental impact studies
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Incurring integration costs related to designing multiple co-dependent features, where the technical uncertainty may only be eliminated by designing the related components
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Implementing counter-terrorism capabilities
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Conducting environmental design
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Conducting sustainable design
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Performing space utilization
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Experimenting with new materials and technologies
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Performing CAD modeling
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Practicing design testing
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Conducing special use design
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Performing harsh environment design & testing
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Conducting BIM modeling
additional engineering industries:
civil
electrical
enivron-mental
mechanical
product
structural
incentAdvise ENGINEERING Specialization Team-
In order to better serve engineering firms of all kinds, incentAdvise has developed an Industry Specialization Program that focuses on the qualification and quantification of R&D tax benefits for companies operating in the engineering industry. incentAdvise’s Engineering Specialization Group employs individuals who have educational backgrounds and practical experience within the disciplines of architecture, civil engineering, mechanical engineering, and electrical engineering. IncentAdvise has qualified and quantified credits for firms ranging from small startup firms to large, multi-national architecture and engineering firms.
