Once a business decides not to leave significant amounts of money on the table in the form of excess tax liability and instead explore R&D Tax Credits, it comes down to identifying qualified research expenses (QREs) during an R&D Tax Credit study.
Claiming the R&D Tax Credit requires completing IRS Form 6765 - Credit for Increasing Research Activities, which is the final step after thoroughly understanding 805 pages of tax code regarding research and development.
Below, we’ll explore IRS Form 6765 in detail so you understand exactly what’s expected. As you’ll see, the form is not particularly complex, but getting the right information to correctly complete the form is — and that’s why most companies partner with a qualified and experienced R&D Tax Credit expert. The right partner will know your industry, learn your business, work with you to complete a study, and stand behind the work performed in the event of an audit.
Are you receiving full value from the R&D Tax Credit?
At first glance, the form appears familiar and simple enough to fill out. However, the instructions are specific and require specific technical tax and industry knowledge to understand the 805 pages of tax code that apply.
Specifically, Internal Revenue Code (IRC) Section 41, which governs the research credit, is complex and minutely detailed. The definition of terms, qualifications, and caveats could confuse most anyone who isn’t an experienced R&D Tax Credit expert.
Plus, references to subsections of Section 41 appear throughout the instructions, which could further complicate one’s ability to process the information.
In order to complete IRS Form 6765, you need to know and provide specific and qualified details such as the following:
Gathering all of the details that answer the questions above may seem overwhelming right now. Even seasoned CFOs and their CPA firm can be legitimately confused by all of the ins and outs of research and development.
Another approach to conducting an R&D Tax Credit study and then completing IRS Form 6765 is to work with a professional R&D tax specialist that knows the specifics of the law and your industry. A seasoned R&D pro can quickly and properly identify which of your company’s activities are eligible for the credit, determine the documentation necessary to support the claim, and help you receive the most credit for your research activities.
An R&D tax specialist, such as Black Line Group, helps you collect and organize all the documents you need to support your claim amounts. This is the smartest and most effective way to ensure that you have the most complete and correct information with which to complete IRS Form 6765 and properly file for the research credit.
Best of all, a key benefit of working with an R&D tax specialist is that this firm will stand behind the work performed in the event of an audit.
Not every manufacturer’s CFO or CPA understands research and development. Read a case study about how one business went against its CPA’s advice, claimed R&D Tax Credits, and enjoyed an ROI of 1,216% of the fee paid. Get your copy by clicking below now.