{"id":2131,"date":"2022-06-09T18:28:08","date_gmt":"2022-06-09T18:28:08","guid":{"rendered":"https:\/\/gtmtax.com\/insight\/the-early-bird-gets-the-rd-tax-credit\/"},"modified":"2025-07-23T20:03:20","modified_gmt":"2025-07-23T20:03:20","slug":"the-early-bird-gets-the-rd-tax-credit","status":"publish","type":"insight","link":"https:\/\/gtmtax.com\/insight\/the-early-bird-gets-the-rd-tax-credit\/","title":{"rendered":"The Early Bird Gets the \u2026. R&D Tax Credit?"},"content":{"rendered":"
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The federal Research & Development Credit<\/a> (Credit) is one of the best methods for U.S. companies to fund their R&D activities.\u00a0 Every year, billions of dollars are claimed by companies across all industries.<\/p>\n

However, there is a catch.\u00a0 For all but certain qualified start-ups, the credit is useful only if a company is profitable and needs to offset federal tax. If, through careful tax planning, or net operating losses, or other methods a company does not have federal tax to offset, the Credit is simply carried forward until it can be used, or it expires (up to 20 years).<\/p>\n

When a company can\u2019t use their Credits, they often choose not to calculate the credits and therefore not claim them on original tax returns.\u00a0 Rather they choose to wait until they can use their credits \u2013 either in the current year, or prior year \u2013 and update their carryforward schedules or amend their returns to claim prior credits. Until recently this strategy hasn\u2019t been ideal, but it also hasn\u2019t led to a significant difference in filing requirements. This is no longer the case due to recent changes.<\/p>\n

What is the Downside of Waiting to Use the R&D Credit?<\/h2>\n

Until recently, the downside of waiting and amending for the Credit was twofold:<\/p>\n