Jiahua US Accounting
Back to Services

Tax Credit Application Services

With the complexity of state tax rules, businesses face unique challenges in tax compliance. Jiahua Accounting Services offers tailored tax credit solutions for businesses of all sizes, including:

  • R&D Tax Credit
  • Self Employed Tax Credit (SETC)

to reduce tax burdens.

What is the R&D Tax Credit?

The R&D Tax Credit is a federal incentive designed to encourage innovation by providing tax credits to companies investing in the design, development, and improvement of processes, products, or services. Startups can even use part of the credit to offset payroll taxes.

How to apply for the R&D Tax Credit?

Eligibility is determined using the IRS "Four-Part Test":

  1. Business Component Test: Activities must improve the function, performance, reliability, or quality of a product, process, or design.
  2. Technological Type: Must involve physical sciences, computer science, engineering, or biological sciences.
  3. Eliminating Uncertainty: Must address uncertainties related to improving product processes or designs.
  4. Experimental Process: Must resolve uncertainties through testing, modeling, or prototyping.

Application Process

  • Step 1: Collect relevant information
  • Step 2: Gather electronic financial data
  • Step 3: Identify qualifying R&D expenses
  • Step 4: Engage with key technical personnel
  • Step 5: Estimate R&D tax credits at federal and state levels
  • Step 6: Submit required documents to the IRS

What is SETC?

SETC (Self Employed Tax Credit) is a federal initiative introduced in response to COVID-19, focused on tax relief for self-employed individuals. Unlike loans or grants, SETC is a tax credit and is non-taxable. Self-employed individuals can claim this tax credit on their income tax returns as compensation for sick leave due to COVID-19.

Eligibility Criteria

  • Identity: Must be self-employed, including sole proprietors, independent contractors, freelancers, or single-member LLCs taxed as sole proprietorships.
  • Income: Must have positive income in 2019, 2020, or 2021 and have paid Self-employment Tax.

Application Deadlines

  • 2020 SETC: Must file by April 15, 2024.
  • 2021 SETC: Can file by April 18, 2025.