Is your company currently using additive manufacturing (a/k/a 3D printing) for research and experimentation? If so, you may qualify for the federal R&D tax credit.
Additive Manufacturing (AM) is used throughout the entire product development lifecycle. Today the technology is used to help company’s visualize product concepts, prototype, refine designs and manufacture final products. “Through quick and cheap cycles of trial and error, manufacturers can tackle a number of situations including: printing a widget just-in-time that solves a problem at hand, producing small batches of widgets, producing tools, showing an artifact to a potential customer or investor to demonstrate a product concept, and supporting the engineering of product usability or manufacture (NIST MEP).” The experimentation needed to refine designs in order to meet the criteria for the final product takes time and costs money.
Whether you are using additive manufacturing technology in-house or working with an engineering design firm, experimentation is being completed. This product experimentation could fulfill the four part test required for the federal R&D tax credit.
Qualified research must meet the following four criteria:
- New or improved products, processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
*Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent.
By tracking the expenses related to your research, while you are actually performing the R&D, means that these expenses may qualify for the federal tax credit. Labor costs are usually one of the largest expenses, so keep time sheets for anyone doing research with notations about what research they conducted and when it was done. A professional tax expert will be able to provide you with additional information about the R&D tax credit and assess whether your research qualifies.
If you are considering additive manufacturing for your business, this tax credit might be just the incentive to help get you started.
For additional information about the R&D Tax Credit:
- The R&D Tax Credits and the U.S. 3D Printing Initiative (R&D Tax Savers)
- Getting Uncle Sam’s Help on 3D Printing Projects (NIST MEP)
- The R&D Tax Credit Explained for Small Business (Bloomberg)
3D Innovations is a full service 3D Engineering/Design company – from the 3D Design to a fully functional 3D Prototype & Product.
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