In order to thrive in the medical device manufacturing field, companies have to constantly redesign and redevelop their products. Since medical devices are usually highly technical in nature, they almost always meet the qualifying activities required to obtain the Research and Development (R&D) Tax Credit.
There are four requirements needed to attain these tax incentives:
- technical uncertainty
- process of experimentation
- technological in nature
- an intention to develop or improve the business component’s function
Medical device manufacturers should never overlook the opportunity of obtaining R&D Tax Credits because their activities qualify at a very high level, often performing R&D activities unknowingly and continuously. Plus, if the company has performed activities for years, it is possible to amend prior year tax returns and claim the R&D Tax Credit at the federal and state levels. A company can also claim the credit if the qualified R&D activity was completed by outside contractors. Additionally, it is important to take a look at the supply costs associated with their activities. These expenditures (QREs) could boost the valuable credit.
Below are some of the most common qualified R&D Tax Credit activities in the medical device manufacturing field:
- New product development and design
- Developing reagents and devices for testing
- Innovations to improve a product’s shelf-life
- Conducting clinical test to satisfy government regulatory requirements prior to commercialization
- Conducting tests to satisfy foreign regulatory equipment
If your company performs any of the activities or incurs in any expenses listed above, then they are strong contenders to claim the R&D Tax Credit. To learn more about the Research and Development Tax Credit visit the Indago website or email us at [email protected]