What Are Qualified Expenses Related To The R&d Credit

The Research and Development (R&D) tax credit offers businesses a valuable opportunity to reduce their tax liability by offsetting expenses related to innovation. To fully maximize your R&D credit, it’s important to understand which expenses qualify. Key categories of qualified expenses include wages, supplies, contract research, and computer leasing. Let’s break down each of these categories and how they can impact your R&D tax credit.

The first category of qualifying expenses is wages. This includes salaries, bonuses, and other compensation paid to employees directly involved in R&D activities. Key roles that qualify for R&D wages include engineers, software developers, scientists, chemists, first-line supervisors, and administrative support roles directly related to the research process. However, general administrative employees like HR and finance typically do not qualify for this benefit.

Other significant qualifying expenses include supplies, contract research, and computer leasing. Supplies refer to materials and equipment consumed during the R&D process, such as laboratory materials. Contract research expenses include payments to third-party contractors, universities, or consulting firms performing qualified research. Additionally, leasing computers used for research purposes is a qualified expense. By properly documenting and tracking these expenses, you can maximize your eligibility for the R&D tax credit, helping to reduce your overall tax burden while supporting innovation in your business.

About Protego Advisers: 

We specialize in crafting strategic plans that help businesses minimize their overall tax liabilities while strictly adhering to legal standards. The U.S. tax system is one of the most intricate and historically complex financial frameworks in the world. Our expertise allows us to navigate this system on behalf of our clients, enabling them to retain more of their earnings with confidence and compliance.