AndreTaxCo, PLLC

Manufacturing Industries

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Many manufacturing businesses are often unaware of whether they qualify for certain government tax incentive programs, or they may believe that such programs do not apply to mass production companies. Even those that are aware often fail to capture the full extent of tax credits to which they are entitled.

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For example, many taxpayers mistakenly believe only professionally licensed engineers and scientists developing innovative and/or uniquely revolutionary patented products or processes are qualified research activities to claim the R&D tax credit under the U.S. tax code. Although patent applications and approval are highly persuasive support for qualified activities for the R&D tax credit, it is not a required prerequisite for qualification. Moreover, other collaborative employees and expenses outside of traditional engineers and laboratory scientists may also qualify for the R&D tax credit.

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Below outlines various federal tax incentives which may be applicable to your business as a cash saving benefit and/or refund opportunity. If any of these credits appear relevant to your business, let AndreTaxCo help you claim the credits that you deserve!

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Research and Development Credits 

• Research Credit (Form 6765) under IRC § 41(a) 

  • See also State R&D Credits additional benefit opportunities.

    • "Start-up" Payroll Tax R&D Credit Offset

    • University Basic​ Research Credit

    • Energy Consortium Research Credit

  • Manufacturing Industry – Qualifying Research Activities Examples​

    • Manufacturing

    • Distribution & Logistics

    • Food Manufacturing

    • Injection Molding / 3-D Printing

    • Metal Fabrication

    • Advance Materials

    • Aerospace & Defense

    • Ship Building & Maritime

    • Electronics / Robotics / Machinery

    • Automotive

    • Energy & Gas

    • Cosmetics & Skincare

    • Generic Drugs

    • Pharmaceutical Companies

    • Printers (Hardware)

    • Chemical Engineering

    • Architecture & Engineering

    • Information Technology & Telecommunications

    • Software Development

    • Other Industries 

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Pharmaceutical Industry Credits

• Orphan Drug Credit (Form 8820) determined under IRC § 45C(a)

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Hiring Credits & Incentives

• Work Opportunity Credit (Form 5884) under IRC § 51(a) 

• Differential Wage Payment Credit (Form 8932) determined under IRC § 45P(a) 

• Indian Employment Credit (Form 8845) as determined under IRC § 45A(a) 

• Empowerment Zone Employment Credit (Form 8844) determined under IRC § 1396(a) 

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Alternative Fuel / Vehicle Industry Credits

• Low Sulfur Diesel Fuel Production Credit (Form 8896) determined under IRC § 45H(a) 

• Carbon Dioxide Sequestration Credit (Form 8933) determined under IRC § 45Q(a)​ 

• Alternative Fuel Vehicle Refueling Property Credit (Form 8911) to which IRC § 30C(d)(1) applies 

• Alternative Motor Vehicle Credit (Form 8910) to which IRC § 30B(g)(1) applies 

• Biodiesel Fuels Credit (Form 8864) determined under IRC § 40A(a)

• Second Generation Biofuel Producer Credit (Form 6478) (fka “cellulosic biofuel producer credit”) (IRC § 40(b)(6))

• Qualified Plug-in Electric Drive Motor Vehicle Credit (Form 8936) to which IRC § 30D(c)(1) applies 

• Excise tax credits for alternative fuel and alternative fuel mixtures (Form 4136) (IRC §§ 6426(d) and (e), and 6427(e)) 

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Building Renovation & Modification (Disability Access) Credit & Incentives

• Rehabilitation Credit (IRC § 47) – renovation of qualified rehabilitation building(s) (e.g. historical properties) credit

• Disabled Access Credit (Form 8826) under IRC § 44(a) in the case of an eligible small business (as defined in IRC § 44(b)) 

  • ​See also "Barrier Removal Tax Deduction" pursuant to IRC § 190

    • ​The Architectural Barrier Removal Tax Deduction encourages businesses of any size to remove architectural and transportation barriers to the mobility of persons with disabilities and the elderly. Businesses may claim a deduction of up to $15,000 a year for qualified expenses for items that normally must be capitalized.

    • Businesses claim the deduction by listing it as a separate expense on their income tax return. Also, businesses may use the Disabled Tax Credit and the architectural/transportation tax deduction together in the same tax year, if the expenses meet the requirements of both sections.

    • To use both, the deduction is equal to the difference between the total expenditures and the amount of the credit claimed.

    • See IRS Publication 535; 26 U.S. Code § 190 (expenditures to remove architectural and transportation barriers to the handicapped and elderly).

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Energy Credits & Incentives

• Investment Tax Credit (aka "ITC") (Form 3468) under IRC § 46 

• Energy Credit (IRC § 48)

• Marginal Oil & Gas Well Production Credit (Form 8904) determined under IRC § 45I(a) – Permanent but may be phase out and unavailable based on commodity prices each period applicable. No credit is allowable unless an election is made not to claim the section 45K credit for that well.​

• Enhanced Oil Recovery Credit (Form 8830) under IRC § 43(a) – Permanent but may be phase out and unavailable based on commodity prices each period applicable

• Energy Efficient Home Credit (Form 8908) under IRC § 45L(a) 

• Mine Rescue Team Training Credit (Form 8923) determined under IRC § 45N(a)

• Production Tax Credit (aka "PTC", "Renewable Energy Production") (Form 8835) under IRC § 45 – The PTC expired for non-wind technologies at the end of 2017, while a reduced credit of 40% was available for wind facilities through the end of 2019, expiring for years 2020 and beyond. Under the tax extenders package, projects that begin construction in year 2019 are eligible for the 40% credit, and projects that begin construction in 2020 will be eligible for a 60% credit.​

  • Pursuant to the most recent package of tax extenders ("Taxpayer Certainty and Disaster Tax Relief Act of 2019"), the full PTC would be retroactively revived (non-wind technologies) and extended through 2020 for the following below. Under current law, those technologies are generally only eligible for the PTC to the extent construction began before 2018 (other than certain closed-loop biomass and qualified hydropower technologies, which must be placed in service before 2018). Under the recent extenders package, those dates would all be extended out to the end of 2020.

    • Closed loop biomass

    • Open loop biomass

    • Geothermal plants

    • Landfill gas (municipal solid waste)

    • Trash (municipal solid waste)

    • Qualified hydropower

    • Marine and hydrokinetic renewable energy facilities

• Credit for Certain Nonbusiness Energy Property (Form 5695) under IRC § 25C)

  • ​*Lifetime Limitation: The credit allowed under this section with respect to any taxpayer for any taxable year shall not exceed the excess (if any) of $500 over the aggregate credits allowed under this section with respect to such taxpayer for all prior taxable years ending after December 31, 2005.​

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Low-Income / Targeted Geographical Zone Credits

• Low-Income Housing Credit (Form 8586) under IRC § 42(a) 

• New Markets Tax Credit (Form 8874) determined under IRC § 45D(a) ​​​

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Business Benefit Plan Credits

• Small Employer Health Insurance Credit (Form 8941) determined under IRC § 45R – available for tax years beginning after 2009. For tax years beginning after 2013, the credit is only available for a 2-consecutive-tax-year credit period.

• Paid Family and Medical Leave Credit (Form 8994) determined under IRC § 45S(a) in the case of an eligible employer (as defined in IRC § 45S(c)) 

• Credit for Small Employer Pension Plan Startup Costs (Form 8881) determined under IRC § 45E(a) in the case of an eligible employer (as defined in IRC § 45E(c)) – up to $5,000 per year for up to three years ($15,000 cap)

• Credit for Employer-Provided Childcare Facilities and Services (Form 8882) determined under IRC § 45F(a) 

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Railroad Industry Credits​

• Railroad Track Maintenance Credit (Form 8900) determined under IRC § 45G(a) 

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Note, many of these listed federal credit incentives have comparable state tax incentives that are often substantially similar to calculate or claim, subject to state specific procedural rules and regulations.

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