AI FOR R&D TAX CREDITS
Can AI Consulting and Development be Used for State and Federal R&D Tax Credits?
At this point, I sound like a broken record, “Get started today using AI!” It’s not too late, I promise. AI is a marathon… so lace up your trainers, cross the starting line, and get in the race. Every step you take, small shuffles or big, long strides, will give you and your firm a competitive advantage next week, next month, and next year. And the ROI of current AI technology is not just qualitative. It can be quantified too – give me a shout, and I’ll talk you through my equation of expenditures and time savings. Right now, for every $3.62 I spend on AI, I get back one hour of time.
I recently found out it can also be a boost to your business bottom line!
Listening to Jordan Wilson of Corporate Tax Advisors, Inc. (CTA) at Zweig Group’s AI AEC Tech Summit, I learned something interesting that might incentivize AEC firms even further to kickstart their AI journey.
An added benefit and by product of developing your own software and/or AI products is a state and federal R&D tax credit.
Based on our agreement when you hire us for AI consulting, the qualified expenses in developing new AI code and/or products belong to you based on rights and risk rules. By engaging with us, the expenses associated with development are eligible as QREs and create a tax incentive for your company. In effect, this reducing the overall cost of the project.
Qualification is defined as the design and development of new AI code and/or software.
A contractor is defined as having a contract for engagement, with an hourly rate, and the rights are owned by the Client.
Qualified expenses are defined as 65% of W2 and contractor spend related to the development of new AI code and/or products.
The R&D tax credit is equal to 8% of the qualified expenses.
As an example, if a firm spent $100,000 with a contractor to develop new AI code and/or products, the qualified expense would be $65,000. Applying 8% of that for the tax credit equals $5,200.
If you want to know more, reach out directly to Jordan for information on the R&D tax credit (https://www.linkedin.com/in/j-jordan-wilson-98343832/) and to me for AI engagement and developer recommendations (https://www.linkedin.com/in/kristinkautz/). We are both here to help you get the most value and return from creating and implementing AI in your business.
