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 sixth R&D Tax Credit myth (a myth that deals with the actual government contracts themselves):
Myth 6: My government contract prevents me from claiming R&D credits.
That depends on your contract. In reality, eligibility depends on the language contained in the contract, not the contract itself. Each individual clause of the contract must be examined and analyzed against a pattern of cases and Treasury regulations that govern what contracts qualify for the R&D Tax Credit. These regulations can be difficult to wade through, but they often are the ticket to allowing government contractors to claim the credit with confidence.
The take home lesson here—the Research and Development Tax Credit is one of the more specialized areas of the tax code, and to ensure you are taking advantage of its full benefit, bringing an experienced tax and legal consultant into the process is a must. Considering the potential value on the table for eligible businesses, exploring the credit with a qualified consultant is most certainly a worthwhile investment.