A QRE is a "Qualified Research Expenditure" as defined by the IRS Section 41(b).
A qualified research expenditure (QRE) includes any eligible expenses for the R&D tax credit, such as wages, supplies, and contract research expenditures. While many companies first think of full-time product development engineers' wages as the primary eligible expenses, a closer look at definitions and examples may reveal the inclusion of additional wages, supplies, or contract research. Here's a list of tasks that can be performed within an organization that would qualify for the R&D Tax Credit:Manufacturing
- Fabrication
- Engineering
- New Product & Process Development
- Developing New Concepts or Technologies
- Design - Layout, Schematics, AutoCAD
- Prototyping or Modeling
- Testing / Quality Assurance: ISA 900X, UL, Sigma Six, etc.
- Integration of new machinery (CNC, SLA, SLE, etc) into existing process
- Software Development or Improvement
- Automating /Streamlining Internal Processes
- Developing Tools, Molds, Dies
- Developing or Applying for Patents
Who Qualifies for R&D Tax Credit?
The definition of research and development (R&D) is much broader than many people realize. Activities and expenses related to the development or improvement of a product and/or process often qualify for R&D tax credits. Additionally, engineering, design, testing, and programming are now considered Qualified Research Activities (QRE). Industries that most commonly qualify include:
- Manufacturing
- Fabrication
- Engineering
- Software Developers
- Chemical
- Tool & Die
- Machine Shops
- Plastics Manufacturers
- Pharmaceutical
- Biotechnology
- Food Sciences/Manufacturers
The benefits of having an R&D Tax Credit Study performed would be:
- Dollar for dollar credit against taxes owed or previously paid
- Carry forward credit for future profitable years
- Immediate increase in company cash flow
- Credit average is over $25,000 per $1,000,000 in total company payroll
Our Methodology
Our team consists of highly qualified professionals, including IP attorneys with engineering backgrounds. We adhere to the Comprehensive Project-by-Project Approach methodology required by the IRS. By following this methodology, we ensure that every eligible employee, activity, hour spent, and corresponding wage paid are thoroughly reviewed to maximize incentives for our clients. We strictly adhere to the applicable sections of the code and provide top-notch documentation to support our findings.