What expenses go into the R&D tax credit calculation?

Since R&D “spend” drives the R&D tax credit, we are often asked, “What actually qualifies as an R&D expense?” The taxable wages of employees who conduct R&D, directory supervise or support qualified activities are inputs into the R&D tax credit calculation. Typically, some percentage of the employees W-2 box 1 wage is considered based on the time spent conducting, supervising, or supporting R&D. Often times, but not always, wages will drive the majority of a client’s R&D tax credit. The costs of supplies used in qualified activities are also inputs into the R&D tax credit calculation. These supply costs exclude depreciable capital assets (such as expensive equipment), land, and improvement to land. General administrative supplies are also excluded. Examples of … Read More