The Highest Impact Tax Credit You Need to Know About

For many business owners, taxes can be a headache. That’s why it’s important to take advantage of any tax credits or deductions available to your industry. One such tax credit that you might not know about is the Research and Development (R&D) tax credit. Generally seen as tailored for engineering and scientific industries, the R&D tax credit has been further expanded to include other industries, including dentists and chiropractors. In this blog post, we’ll explore why R&D tax credit is important for dentists and chiropractors and how it can impact your taxes.


1. R&D Tax Credit in a Nutshell


The R&D tax credit is considered the highest impact tax credit and is available to businesses conducting research and development within the United States. The tax credit is based on qualified research expenses (QRE), which includes wages, supplies and equipment used in the research and development process. For example, if you’re a dentist or chiropractor and you are developing new medical products, the R&D tax credit can help offset your expenses. Eligible expenses that qualify for the R&D tax credit include US-based employee salaries, subcontract costs, and materials consumed in R&D.


2. R&D Tax Credit: Carry back and forward


Once you claim the R&D tax credit, you can carry it back 5 years or forward 20 years. This means that if you weren’t profitable in a specific year, you can use the tax credit against taxes owed in previous years. Also, if you’ve paid too many taxes that year, you can carry forward the R&D tax credit to offset your future taxes.

3. R&D Tax Credit: Income Taxes or Payroll Taxes


Another great feature of the R&D tax credit is that it can be used against income taxes or payroll taxes. The credit is not limited to just income taxes, and can help boost cash flow by offsetting research and development costs by way of payroll taxes.


4. Documentation Required for R&D Tax Credit


It’s important to note that documentation is required when claiming the R&D tax credit to defend your claim against potential challenges from the IRS or state tax authorities. Documentation for R&D tax credits involve including detailed explanations and support for qualifying research expenses, payroll data, project descriptions, technical designs, process diagrams, and any relevant examples of testing or experimentation.


5. Why R&D Tax Credit Matters for Dentists and Chiropractors


You might be thinking: why should a dentist or chiropractor claim the R&D tax credit? The answer is simple: the R&D tax credit can help offset the cost of research and development for new products or services. Not only can it ultimately help you save more money on taxes, but it may also stimulate growth in the process of developing new and innovative products or services for patients.




If you’re a dentist or chiropractor and you’re working on research and development, then the R&D tax credit can be an excellent opportunity for you. In conclusion, the R&D tax credit is a powerful tool for any business owner looking to take advantage of available tax credits and reduce their tax liabilities. It is an especially valuable tax credit for those working in the healthcare industry where new breakthroughs in medical technologies are continuously being made. By exploring what qualifies for the R&D tax credit and documenting accordingly, you can potentially save more on taxes and recover some of the funds used for research and development efforts.


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