Frequently Asked Questions
What is the R&D tax credit?
The federal R&D tax credit is a dollar-for-dollar reduction in income tax liability or payroll tax liability for qualified expenditures incident to the development or improvement of a product, process, software, formula or invention.
How much of my payroll does the credit offset?
R&D Tax Credits are generated from the qualified research activities QRAs a company is engaging in over the course of their tax year, and it is calculated by the qualified research expenditures QREs (W-2 wages, contractors, supplies) associated with the QRAs.
Once the credits are calculated, the credits are then applied to the TOTAL payroll liability (employer social security portion). This liability is approximately 6.2% of your total payroll or $62,000 for every $1M spent.
Let’s say your company does spend $1M in payroll and your Software engineers make up half of your payroll at $500k and are all involved in QRAs. The company yields $25-50k (based on rad app historical data) in credit that then get applied toward reducing the company’s $62k over the course of the year.
Depending on your payroll provider, this can be immediately reduced over every pay period, or every quarter.
Does my startup qualify for the credit?
You likely qualify if your company is less than 5 years old, has generated $5m or less in gross receipts for the claim year, and has incurred $100k in R&D related expenses.
See our tax credit calculator*
How long will the filing process take?
Duration is highly correlated with the amount of R&D spend in addition to the number of eligible projects and resources. If all the applicable information is easily accessible, the process usually takes the end user just 2-3 hours!
Cash savings on your payroll taxes can vary depending on your payroll provider. Most savings will occur 6-10 weeks after you complete your claim with the rad app and include it into your tax filing with your CPA.
How does The rad app streamline this process?
We’ve eliminated the back and forth document requests and phases that create a burden on the companies time and day to day priorities. Inputting all of your data into one secure platform is not only convenient, but it ensures that nothing is left missing a long the way. Plus, having guided definitions, examples, and support right at your fingertips along the way ensures you’re on track to most effectively claim every dollar you’re due.
Why haven't I heard about this credit earlier?
This IRS incentive was recently made permanent by the Federal government with the “PATH” Act of 2015. With permanency came lucrative enhancements to the code. While the R&D tax credit is not new, your company now no longer has to be profitable to take advantage of this valuable credit. All eligible companies can now apply the credit against their payroll taxes resulting in an immediate cash injection of up to $250,000.
How much does it cost?
Pricing is based upon the amount of data our technical staff must take to analyze your company’s quantitative and qualitative data. Our three-tier pricing is directly correlated with the amount of R&D spend in addition to the number of eligible projects and resources we must thoroughly compute, review, and complete.
Why does The rad app charge a flat rate?
Our experience allows us to know what the involvement looks like for a Startup’s R&D credit claim at different stages of the Startup’s life cycle. The flat rate is charged because the application allows a for leaner overhead on each project, allowing us to price more cost effectively.
How is The rad app different?
Its the first web-based application of its kind and it is specifically designed for technology Startups. It brings all necessary pieces of data into one simplified platform, and it walks the user through the questions efficiently, always with support just a call or email away. It minimizes the weeks or months its would normally take outside an application to just a matter of hours of the client’s time.