Could Your Strategic Response to COVID-19 Result in Tax Savings?

The economic and social impact of COVID-19 has changed life as we know it – and how businesses operate. From how, where, and what you are working on; the change in “normal” has most likely affected every aspect of your life and, most likely your business. 

If you have experienced change and have had to adapt to a new “normal” (potentially enhancing e-commerce or remote functionalities, changing manufacturing lines to respond to needs like face masks and ventilators, to enhanced functionality through web offerings); a research and development tax credit may be available to help offset some of these costs and save you real tax dollars. Talk with your Lurie advisor to discuss how you have changed your business, processes or distribution methods – and we can help you explore how this credit can be applied. 

The R&D tax credit looks at various costs related to:

  1. Developing a new or improved function, performance, reliability, or quality of a ‘business component’ (i.e. product, process, formula, technique, invention, or software);

  2. That involves utilizing hard sciences (physics, biology, chemistry, mathematics, computer science);

  3. Has elements of technological uncertainty; and

  4. Involves a process of experimentation

Types of costs that could be included for purposes of claiming an R&D credit include:

  1. Wages for those individuals directly performing, directly supervising, or directly supporting the R&D functions;

  2. Supplies used or consumed within the research; and/or

  3. Costs incurred to pay outside contractors for performing the research activities

Meet Our Team

Julie A Helms, CPA

Director, Specialty Tax Services

Julie has over 10 years of experience with fixed assets, specializing in cost segregation and expense vs. capital analyses. She has a unique approach and enjoys the complicated areas of the tax law where she can come up with creative solutions for her clients. Knowing the correct answer can look different for each client, Julie works with clients and their current systems and processes to find the best solution tailored for them. Julie has mastered the art of taking complicated tax concepts and translating them into understandable and implementable processes.

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This article is for your general education, and does not create a client relationship or any service engagement between you and Lurie LLP. The content of this article is based on the best information available, but official guidance, rules, laws and/or updates may change and become out of date. Please contact your Lurie advisor before acting on any of the information contained in this article.

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