Cracking the R&D Tax Credit Code: Section 41 Explained

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Tax in Action: Practical Strategies for Tax Pros

Jeremy Wells, EA, CPA

14 episodes

1 week ago

Join Jeremy Wells, EA, CPA, as he breaks down the complexities of tax law into practical guidance you can apply immediately. Each episode focuses on a specific tax strategy, credit, or compliance issue that matters to tax professionals and business owners. Rather than theoretical discussions, Jeremy delivers actionable insights based on real-world scenarios and current tax regulations. Whether you're navigating Section 1031 exchanges, maximizing research credits, or helping clients with energy tax incentives, this podcast provides the technical details and strategic considerations you need to confidently serve your clients. Perfect for tax practitioners looking to deepen their expertise and business owners wanting to make more informed tax decisions.

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Cracking the R&D Tax Credit Code: Section 41 Explained

Tax in Action: Practical Strategies for Tax Pros

1 hour 4 minutes

5 months ago

Cracking the R&D Tax Credit Code: Section 41 Explained

The R&D tax credit offers significant tax-saving potential, yet remains misunderstood by many small business owners and their advisors. Jeremy breaks down the key components of the Section 41 credit, explaining qualified research activities, eligible expenses, and calculation methods. Small service-based businesses might qualify more often than they realize, especially when research activities relate to technological innovation, computer science, or engineering processes.

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(00:00) - Introduction to the R&D Credit
(03:00) - Components of the R&D Credit
(06:00) - Defining Qualified Research
(13:00) - Business Components and the Shrinking Back Rule
(21:35) - Non-Qualifying Research Activities
(25:35) - Internal Software and the High Threshold of Innovation Test
(30:35) - Calculating the R&D Credit
(33:35) - Qualifying Wages and Expenses
(39:35) - Contract Research Expenses
(44:35) - Credit Calculation Methods
(50:35) - Payroll Tax Election for Startups
(52:35) - Interaction with IRC Section 174
(54:35) - Special Rules for Partnerships
(57:35) - Common Myths and Final Thoughts

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