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| R&D Tax Credit - Preparing Your Research Tax Credit Claim In-House | |
| by Mark Lauber | |
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The US Congress passed the Emergency Economic Stabilization Act of 2008 (EESA) today. As part of the EESA, the R&D Tax Credit (Research Credit) was extended through 2009. This means it will apply to tax years 2008 and 2009.
The R&D Tax Credit drives billions of dollars in economic activity and keeps thousands of high-skilled jobs here in the US. The R&D Tax Credit had expired at the end of 2007 and had failed several times previously to be passed as parts of other bills in Congress. Within the R&D Tax Credit, the Alternative Simplified Credit has been increased from 12% to 14% for tax year 2008. This is a significant change. According to Saqib Dhanani, a Principal with Paradigm Partners, "This is will provide the ability of many more companies to take advantage of the R&D Tax Credit. The credit is an incremental credit from a fixed base percentage which was difficult to establish. So, the change eliminates the need to establish the fixed base percentage and companies now will almost always be able to take advantage of the credit". With the extension, companies can now budget properly for 2009. For many companies, the tax credit is an integral part of their planning process and when the credit had not renewed for 2008, it was a difficult situation. It also caused concern for being able to keep employees beyond 2008 but now that has been eliminated. Both Presidential candidates had been proponents for renewing the tax credit and there has been a push from manufacturers to make the credit permanent. Hopefully under a new administration, this can be accomplished. |
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