Research and Development Tax Credit for 2009, 2010
The research and development tax credit is a credit that is applied by your state and the federal government that provides deductions for your business. The amount of the deduction will vary from state to state.
The main goal of this deduction is to provide state university’s with the ability to provide research for your company that is funded by you. Most of the expenses incurred in this process will be considered capital expenses. This credit should be reported on a schedule K form.
The are two different ways to report your research and development costs:
- You can deduct the amount in the same year that the expenses were incurred.
- You may also amortize your expenses over a period of time that is no less than 60 months.
Product
In most cases you will be researching the development of a new product. The word “product” in this case can refer to any of the following:
- Invention
- Formula
- Pilot Model
- Process
- Technique
Non-Deductible Expenses
There are some expenses that you may incur in the process that will not be deductible. Expenses such as promoting or advertising your product will not qualify. Other things that will be nondeductible are things such as quality control testing, surveys, or other types of management studies.
If you are looking to apply for the research and development credit, we suggest giving TurboTax Online a try. Learn more about the research and developement tax credit.
They offer free tax advice if you have any questions about this credit. TurboTax Online will also guarantee the biggest refund possible.
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