Research Activities Credit

AAA

DEFINITION of 'Research Activities Credit'

A nonrefundable federal tax credit implemented in 1981 as an incentive for businesses and other entities to increase their research and development activities. Individuals, estates, trusts, organizations, partnerships and corporations are all eligible to claim the credit using IRS Form 6765, Credit for Increasing Research Activities.

INVESTOPEDIA EXPLAINS 'Research Activities Credit'

Only certain types of research expenditures are eligible for the credit; these are called "qualified research expenses." Qualified research expenses discover technological information that improves an item's performance or functionality, as opposed to its superficial characteristics. To be eligible for the credit, companies must increase their research spending from one tax year to the next (with a few exceptions, such as energy research). Research in the social sciences, arts and humanities is not eligible for the credit.



RELATED TERMS
  1. Orphan Drug Credit

    A federal tax credit that provides an incentive for pharmaceutical ...
  2. Unified Tax Credit

    A tax credit that is afforded to every man, woman and child in ...
  3. Work Opportunity Tax Credit

    A separate, nonrefundable credit that is part of the general ...
  4. Research And Development (R&D) ...

    Any expenses associated with the research and development of ...
  5. Tax Deduction

    A deduction from gross income that arises due to various types ...
  6. Section 1341 Credit

    A tax credit available for taxpayers who are repaid in a later ...
RELATED FAQS
  1. What are some ways to minimize tax liability?

    Minimizing tax liability is one of the most important financial planning aspects for business owners and individuals each ... Read Full Answer >>
  2. What deductions, credits and exemptions depend on gross income calculations?

    The greatest challenge in determining your total tax liability stems from an incomplete understanding of what income figure ... Read Full Answer >>
  3. What is the difference between gross income and earned income?

    Prior to preparing and filing a tax return, do yourself a favor by gaining an understanding of commonly used tax terms including ... Read Full Answer >>
  4. Are Roth IRAs tax deductible?

    Contributions made to a Roth IRA are not tax deductible, although you may be able to take a tax credit, depending on your ... Read Full Answer >>
  5. Are there special benefits for U.S. armed forces personnel?

    If you are a member of the military, you may be afforded special tax benefits that might not be available to other taxpayers. ... Read Full Answer >>
  6. When would I need to use IRS Form 1040X when filing my tax return?

    Taxpayers use Form 1040X only when making a correction to a previous tax return. The taxpayer may have made an error or omitted ... Read Full Answer >>
Related Articles
  1. Entrepreneurship

    Tax Credit For Plan Expenses Incurred By Small Businesses

    Determine whether your business is eligible to claim a tax credit for establishing a retirement plan.
  2. Savings

    Saver's Tax Credit: A Retirement Savings Incentive

    Here's another reason to put money toward your retirement nest egg.
  3. Taxes

    Get A Tax Credit For Your Foreign Investments

    The foreign tax credit provides a break on investment income made and taxed in a foreign country.
  4. Taxes

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
  5. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  6. Taxes

    The First Thing You Should Do With Your Tax Refund

    Nobody likes to pay taxes, but everyone loves to get a tax refund. When the check arrives in the mail, it's hard to resist spending it on some indulgence.
  7. Taxes

    Which Is Better? Tax Preparer Or Tax Software

    Every taxpayer – and every year – is different, so here are four factors to help you decide whether a tax pro or software is best for you.
  8. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.
  9. Economics

    What's a Subsidy?

    A subsidy is a benefit given to an individual, business or institution, typically by the government. Subsidies are given to promote a social good or an economic policy. The government usually ...
  10. Economics

    EU Probes Tax Laws To Catch Corporate Cheaters

    Recently, the EU has launched an investigation into tax deals between Amazon and the country of Luxembourg.

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center