The R&D Tax Credit is one of the most under-claimed tax incentives in the U.S., especially by small and mid-sized companies.
Many business owners think R&D only applies to labs, pharmaceuticals, and high-tech engineering.
But that’s not the case.
If your business is improving products, processes, software, materials, or efficiency — you may already qualify, even if research failed.
🧪 What Counts as R&D?
To qualify, activities must meet the IRS Four-Part Test:
| Requirement | Meaning in plain English |
|---|---|
| Permitted Purpose | You’re improving or creating a product/process |
| Technological in Nature | Based in hard sciences (engineering, comp-sci, chemistry) |
| Elimination of Uncertainty | You didn’t know the outcome before testing |
| Process of Experimentation | You evaluated alternatives, tested, iterated |
This credit rewards innovation, not perfection.
Even trial-and-error qualifies.
🔥 Industries That Commonly Qualify
Many companies don’t realize they meet the criteria:
- Manufacturing & process improvement
- Software development (internal + external products)
- Packaging engineering & structural redesign
- Automation & workflow optimization
- Product testing, prototyping, material changes
- Agriculture, hydroponics, food & formulation
- Hardware components + CNC machining
If you develop, improve, reduce cost, reduce waste, or innovate — you may qualify.
💰 What Expenses Can Be Claimed?
The IRS allows four primary cost buckets:
| Eligible Expenses | Examples |
|---|---|
| Qualified Wages | Engineers, developers, designers, R&D labor % allocation |
| Supplies | Prototypes, trial runs, materials consumed |
| Contract Research | Third-party R&D consultants or development partners |
| Cloud Computing & Hosting | AWS, Azure, test environments, dev infrastructure |
Most companies leave 40–70% of credit value unused because they don’t track research labor properly.
A well-structured cost allocation model increases refund significantly.
🧠 Credit Types: ASC vs Regular Method
There are two ways to calculate your credit:
1️⃣ ASC (Alternative Simplified Credit)
- Most common method
- Lower documentation burden
- 14% of qualified expenses over base amount
2️⃣ Regular Method
- More complex but often yields larger credit
- Best for companies with strong historic R&D documentation
Choosing the right method can swing thousands — sometimes six figures — in your favor.
🔧 How TATG-LLC Helps Maximize R&D Credit
We guide companies through a complete R&D credit workflow:
✔ Identify qualifying projects + activities
✔ Allocate engineering + dev wages accurately
✔ Document uncertainty & experimentation to IRS standard
✔ Build cost allocation frameworks supported by GL activity
✔ Prepare Form 6765 + state-specific filings
✔ Support CPA + audit review if triggered
Our goal is simple:
Turn innovation into real cash savings.
📈 Results We Typically See
Companies that formalize R&D documentation see:
| Benefit | Result |
|---|---|
| Immediate cash reduction on taxes | Refund or offset thousands to millions |
| Reduce future tax liability | Carryforward for 20 years |
| Payroll tax offset (for startups) | Credit against FICA for qualifying firms |
| Improved engineering accountability | Track value of development efforts |
If you’re building, improving, or optimizing — the IRS wants to reward you.
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If you think you may qualify for the R&D Credit — even slightly — let’s explore it.
👉 Request R&D eligibility review
📩 robert@tatg-llc.com
🌐 TATG-LLC.com
A 30-minute call could return tens of thousands.
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