Moving along in our blog series on the eight myths that are costing software and technology government contractors big dollars in annual tax savings, let’s explore our third R&D Tax Credit myth (a myth that certainly isn’t unique to software and technology companies):
Myth 3: The R&D Tax Credit is only for large companies.
This is exactly what too many small and mid-sized businesses think when it comes to claiming the credit. Larger corporations, having the funds to hire tax attorneys and internal tax departments, are no doubt all over the R&D Tax Credit, perhaps creating a misperception that the credit was not designed for the benefit of small businesses.
However, there is no red velvet rope barring small and mid-sized companies—including smaller software and technology firms that just happen to work contractually for the government—from claiming the R&D Tax Credit. The credit is indeed available to smaller businesses, but those companies do need to apply to reap the tax benefits—the IRS isn’t in the business of just handing out tax credits.