The Research and Development Tax Credit
How can an Architect Qualify for a R&D credit???
The Research and Development Tax Credit has been around in the US since 1981, and has gone through many changes in its almost 30 years of existence. For most of its life, the credit was on the books for two years, and had to be extended by the mercy of Congress. Then, in 2015 the PATH (Preventing Americans from Tax Hikes) Act of 2015 made the credit permanent.
The R&D tax credit is one of the most significant domestic tax credits remaining under the current tax law, yet so many do not believe they qualify for the credit, including Architectural Firms. How can this be? Sadly, far too many companies believe that you have to be a “Mad Scientist” in a lab, with a beaker in your hand, shouting out EUREKA, to qualify for the R&D tax credit.
Yes, in the dark ages of the R&D tax credit, this was basically the case as one had to have a patent, or something that was new to the world to qualify for the credit.
Fast forward to the modern day R&D tax credit, and companies now only need to develop something that is “New or Improved” to their operations. So how in the world can an Architect qualify for the R&D tax credit?
In the world of Architectural Design, it is not only what a building looks like on the outside, but how it functions on the inside. With more and more buildings becoming more energy efficient, and having to meet the constantly changing building codes, the design involved in meeting these changes are the activities can qualify for the R&D tax credit.
If you are performing any of the following activities, then you may qualify for the R&D tax credit:
- Developing energy efficiencies
- LEED certification
- Designing building systems
- Designing unique building facades
Note, this is not an all inclusive list, and exploring the R&D tax credit should be discussed with your most trusted advisor, your CPA. Your CPA can better determine if this is an avenue to be pursued, as there are many variables that go into this decision, including utilization of the tax credit.
To make it even easier to qualify, an Architectural firm can design in the US, using US labor, and the structure can be built in another country. A firm can benefit from all activities which occur in the US, regardless of where the structure is built!
Engineered Tax Services is a Preferred Provider for the AIA, and can help to determine if your firm would benefit from an R&D tax credit study. Remember, if you are not capturing the credit, you could be leaving money on the table!
Jill Mazur, Director
Engineered Tax Services