Businesses can get thousands of dollars in research tax credits

As tax calculations pile up, businesses continue to look for ways to get tax credits. Two of these great tax benefit tools are the Research Tax Credit and the 179D Energy Efficiency Tax Deduction. The first aspect applies to tax benefits to encourage companies to invest in business research and development on US soil. 179D tax deductions, on the other hand, help businesses see the payoff in reduced energy use. In reality, companies, except for large ones, rarely look at these aspects of tax benefits.

• Research incentive

The concept of a tax credit based on investments in research and development began in the early 1980s, and since then the credit has gone through fourteen extensions, with the current system expiring in December 2013. The last extension of the credit system it was through the passage of the American Taxpayer Relief Act (ATRA) of 2012. Since this is a largely unknown tax credit, many businesses, large or small, don’t take advantage of it.

• anyone can apply

Many companies are of the opinion that they can claim the research tax credit only when they are investing in research to develop something new through a recognized research setting. Although this fact is mostly true, however, it is not an absolute fact. Companies that can show documented evidence of investing in research to improve existing products and not always through a laboratory setting can successfully apply for this credit. Even small businesses can also apply when they can show evidence of collecting customer interaction data and investing in the analysis of this data.

From manual ‘fill in the form’ research to online business research using various CRM system analytics, all are eligible for this tax benefit. It also applies to state laws, as 38 states now include a research tax credit and many more are considering implementing this policy to encourage companies to perform with greater scientific precision. Businesses applying the results of their research through smart branding and neuro marketing should also consult with tax experts to assess their eligibility.

• Tax benefits of adopting energy efficiency

Similarly, the 179D energy efficiency tax deduction can also be a potential source of tax benefits. These deductions work in accordance with the statutory provisions of the Emergency Economic Stabilization Act of 2008. To be eligible for this, businesses must make significant reductions (50%) in energy spending for HVAC, building envelope, and interior lighting , as of January 2006. The current rate of deductions is $1.8 per square foot for those eligible.