Tax Deductions For Business Expenses

🇦🇪 The UAE just restructured the economics of doing R&D here. Health sector, this is relevant. Ministerial Decision No. 24 of 2026, issued by the Ministry of Finance, UAE two days ago, operationalises the UAE's R&D Tax Credit framework — and the mechanics are more consequential than the headline suggests. 📊 The credit is tiered, and both spend and headcount thresholds must be met simultaneously: Up to AED 1M → 15% | AED 1M–2M → 35% | AED 2M–5M → 50% Miss either threshold — expenditure or minimum R&D staff count — and the rate steps down automatically. 🏥 What health sector entities need to understand: The qualifying expenditure categories are broader than many assume — covering staff costs (with a 30% overhead uplift), consumables directly used in R&D, and subcontracting fees, provided all activities are conducted within the UAE. At maximum scale, the credit is globally competitive. Social sciences and humanities are explicitly excluded. Research-active health institutions designing mixed-methods work should assess qualifying boundaries at project inception, not retrospectively. ⚙️ The credit is earned, not automatic: Pre-approval is mandatory before claiming. Documentation retention runs seven years. Non-compliance triggers claw-back treated as unpaid tax — with penalties. 🏗️ The strategic read: The conditions are maturing for the UAE to become a genuine site of health research production. This framework, alongside institutions like MBZUAI, ATRC, and Khalifa University's health research platforms, gives health sector entities a meaningful fiscal reason to conduct their R&D here rather than elsewhere. For organisations already operating in the UAE, the infrastructure exists. The incentive now does too.

Two startups. Same stage. Both raised a $4M seed round. Both have 10 engineers. Two years later, their runways look nothing alike: Startup A: → Annual engineering payroll: $1.5M → R&D tax credits claimed: $0 → Payroll taxes paid in full: $114,750/yr → Runway remaining: 14 months → Raising again in 6 months out of necessity Startup B: → Annual engineering payroll: $1.5M → R&D tax credits claimed: $150,000/yr → Payroll taxes offset entirely → Runway remaining: 18 months → Raising from a position of strength Same team, product & investors. One founder extended runway by 4 months without cutting a single engineer. The other had no idea this existed. Over 3 years, that gap is $450,000 in cash back in the business. That's two more senior hires. That's making it to the metrics you need for a Series B instead of panic-raising a bridge round. The credit has been around for decades. Your CPA probably never brought it up because most generalists don't specialize in it. That's literally why I built TaxTaker. We've saved companies north of $100M since 2018. 

I talk to founders and CFOs every week who are spending millions on AI. Almost none of them are claiming the R&D tax credit for it. Here's what surprises people the most: 1. You don't need to be an "AI company." A manufacturer that built a predictive maintenance model qualifies. A hospital that developed an AI diagnostic tool qualifies. A retailer that built a recommendation engine qualifies. 2. Vibe coding doesn't disqualify you. If your engineers are using Copilot or Cursor, the testing, debugging, and design decisions they make around AI-generated code can be the qualifying activity. 3. Your cloud bill is probably full of unclaimed QREs. GPU training runs qualify under Section 41. But if your AWS or Azure billing doesn't separate R&D from production, you're leaving real money on the table. And then there's your token usage for generative coding. Those expenses can qualify too. 4. 2026 is the best year to claim since 2021. OBBBA restored immediate expensing under Section 174A. Your AI spend now generates a deduction AND a credit in the same year. 5. Documentation standards just changed. Form 6765 Section G goes mandatory for 2026 returns. If you're not building project-level records now, you're already behind. My team at Strike just published a full guide covering what qualifies, what doesn't, real-world scenarios, and the expenses most companies miss. Full guide 👇 in the comments. What's the most surprising R&D credit qualification you've seen at your company? I'd love to hear it. #RDTaxCredit #ArtificialIntelligence #GenerativeAI #AIStartups #MachineLearning #RandDTaxCredits #SoftwareDevelopment #VibeCoding #AI 

Attention Small Business Owners: You Might Be Leaving Money on the Table! The IRS just dropped a new rule (Rev. Proc. 2025-28, issued August 28) that could mean extra cash for businesses doing research and development (R&D). If you’ve done ANY R&D work in the last few years, here’s what you need to know: You can now amend your 2022–2024 tax returns to claim the R&D credit—even if you didn’t claim it originally. That’s money back in your pocket. Do you qualify? Your work needs to meet these 4 tests: - It’s technical (think science or engineering—not marketing or admin tasks). - You faced uncertainty about how to achieve the result. - Experimentation was involved (trying different methods or designs). - It’s a new or improved product, process, or software (new to YOU, not something off-the-shelf). Key Details: Only U.S.-based R&D qualifies (foreign R&D costs still need to be amortized over 15 years). Deadlines to amend: 2022 returns: March 15 or April 15, 2026 (depending on your entity type). 2023 & 2024 returns: July 6, 2026. This won’t apply to every business, but if you qualify, it’s a chance to recover credits you might’ve missed. Don’t wait—talk to your tax advisor or accountant to see if this applies to you.

Building your tech team? The math just shifted. A recent tax code change now allows companies to immediately expense U.S.-based R&D costs. That includes wages for engineers, data scientists, and others solving complex technical problems. A few practical implications: - Onshore hiring is now more cash-efficient than offshore. - Startups may get longer runway without changing headcount plans. - For larger orgs, it's one more lever to defend early investment in AI and data infrastructure. - Private equity firms are paying close attention: better R&D tax treatment can boost portfolio company cash flow and valuations. - Competition for experienced R&D talent is likely to tighten. This won’t solve the tech industry’s deeper challenges - layoffs, talent shortages, or market uncertainty - but it’s a practical advantage worth factoring into talent strategy.

There's a tax deadline on July 4th that most business owners have never heard of. If your business spent money on R&D in the last few years, you were probably forced to capitalize those costs and spread the deduction over five years. The new law reversed it. You can deduct domestic R&D costs in the year you incur them again. Here's the part nobody is talking about: smaller businesses can go back and amend prior-year returns to reclaim those capitalized costs as refunds. But the window closes July 4, 2026. And here's my frustration: Most of those amended returns will never get filed. Not because the refunds aren't real. Because most firms are buried in compliance work and don't proactively call their clients about opportunities like this. This is the difference between a tax preparer and an advisor. A preparer files what you hand them. An advisor calls you in June and says "we need to look at your R&D costs before this window closes." If you've spent money on development, software, product improvement, or process engineering in the last few years and your CPA hasn't mentioned this… ask them about it this week! -- New here? 👋 I'm Luke, founder of Shoemaker CPA, and I run a Virginia firm that does two things: ➡️ Helping HNW families coordinate their tax and wealth under one roof ➡️ Working year round with owners of closely held family businesses under $50M. Follow for honest takes on tax, advisory, and running a modern firm.

Everyone's talking about AI investments.  Nobody's talking about the tax credit sitting right next to them. I've spent the last year in conversations with founders pouring serious resources into AI building, experimenting, iterating. Most have no idea they may be sitting on an 𝗥&𝗗 𝗧𝗮𝘅 𝗖𝗿𝗲𝗱𝗶𝘁 opportunity. The old assumption still lingers: R&D credits are for big pharma and tech giants. That ship has sailed. The real question isn't what industry you're in. It's whether your team was solving a problem where the answer wasn't obvious from day one. Uncertainty. Failed attempts. Multiple paths explored. Iterations before a breakthrough. That's where the credit lives. And here's the line that matters most AI adoption ≠ AI innovation. Subscribing to a tool doesn't qualify. Automating an existing process doesn't qualify. But if your team was genuinely working through a hard problem with no guaranteed outcome? That's a different conversation entirely. I recently spoke with a founder whose team spent nearly a year solving a complex AI challenge inside their product. The work was there. The experimentation was there. What was missing was the documentation to prove it. That's the pattern I see most. Not a lack of qualifying activity. A lack of preparation to tell the story. 𝗧𝗵𝗿𝗲𝗲 𝗾𝘂𝗲𝘀𝘁𝗶𝗼𝗻𝘀 𝘄𝗼𝗿𝘁𝗵 𝗮𝘀𝗸𝗶𝗻𝗴 𝘆𝗼𝘂𝗿𝘀𝗲𝗹𝗳 𝗿𝗶𝗴𝗵𝘁 𝗻𝗼𝘄:  Was the solution unknown at the start?  Did you experiment, fail, and refine?  Can you document that journey? The biggest tax opportunities aren't coming from what you purchased. They're coming from what you built. Are you documenting yours? #RDTaxCredit #ArtificialIntelligence #TaxStrategy #BusinessGrowth #ResearchAndDevelopment #TaxCredits

Since we launched our R&D Tax Credit Calculator, our tax team's been flooded with questions. Great questions! So I thought I’d address the most common ones here 👇🏽 1️⃣ "We're pre-revenue. Can we still claim R&D credits?" Yes. The R&D tax credit is based on qualified research expenses, not revenue. If you're paying engineers to build your product, you likely qualify AND get cash back even if you're not profitable yet. 2️⃣ "How far back can we go to claim credits?" You can amend returns from the previous three years thanks to the tax changes in the Big Beautiful Bill. Right now, that's 2022, 2023, and 2024. 3️⃣ "What if we get audited?" If your R&D study is thorough and well-documented, an audit isn't something to fear. The IRS audits claims that look questionable—shortcuts, missing documentation, activities that clearly don't qualify. Our studies are built to hold up. We document everything, apply the full 4-part test, keep detailed records. We've never had a client lose an R&D credit claim in an audit. 4️⃣ "Do we need to be working on something groundbreaking?" No. "Innovation" doesn't mean inventing cold fusion. It means solving technical problems without obvious solutions. And maybe, you tried to solve a problem and it didn’t work – still counts! 5️⃣ "How long does the process take?" For studies: 2-4 weeks, depending on complexity and how fast you can provide documentation. For filing: Your R&D credit gets claimed on your annual tax return, so timing depends on your filing schedule. For amendments: 3-6 months for the IRS to process and issue refunds. 6️⃣ "Can we claim R&D credits if we're also claiming other tax benefits?" Usually yes. R&D credits can often stack with other deductions and credits. But there are some limitations and ordering rules, which is why working with someone who knows what they're doing matters. Still have questions? Drop them below and I’ll answer directly! No question is too basic. This is complex stuff. We'd rather explain it clearly than have you miss out on money you've earned. You can also stop by here and see if you qualify if you're a little shy 🙈: https://lnkd.in/eVC9-W7p

CTOs: There’s a new twist in the onshore vs. offshore R&D conversation—and it impacts your bottom line. Due to recent tax changes, U.S.-based R&D expenses are now fully deductible immediately (instead of the 5 year requirement that was previously in place), while offshore R&D must be amortized over 15 years. What does that mean in plain terms? If your engineers are based in the U.S., you're effectively getting a 20% tax benefit starting in 2025. Offshore talent may be cheaper hourly, but the near-term ROI just shifted—dramatically. This doesn’t mean offshore is off the table. Talent availability, speed, and global capacity still matter. But now, your finance team should be in the room when evaluating the ROI of onshore vs. offshore work. If you're a CTO and haven't spoken with your CFO about this yet—now’s the time. Need help thinking through the trade-offs? I’m happy to chat.

What One Big and Beautiful Tax Bill Could Mean for Cash Flow, Growth, and the U.S. Economy The draft released by the House Ways and Means Committee is making waves nationwide for its potential impact on businesses and the economy. If you’re running a company that invests in innovation, equipment, or beyond, this new proposed bill could fundamentally change your cash flow—and your ability to reinvest. Take XYZ Corp, a mid-sized U.S. manufacturer investing heavily in R&D and equipment. Under today’s tax rules, their ability to fully deduct those investments is limited—and it’s costing them a lot . XYZ profile: • $5M in annual revenue • $2M in ordinary business expenses • $1.5M spent on U.S.-based R&D • $1M in depreciable equipment (5-year MACRS property, bonus eligible, no Section 179 election) In 2024 (current law): • R&D amortization (mid-year convention): only $150,000 deductible in Year 1 • Bonus depreciation at 60%: $600,000 immediate deduction • MACRS depreciation on remaining $400,000: 20% of $400K = $80,000 • Total Year 1 deductions = $2M + $150K + $600K + $80K = $2,830,000 • Taxable income = $5M – $2.83M = $2.17M • Federal tax @ 21% = $455,700 Under the proposed tax bill: • R&D is fully deductible: $1.5M • Bonus depreciation is restored to 100%: $1M deduction • Total Year 1 deductions = $2M + $1.5M + $1M = $4.5M • Taxable income = $500K • Federal tax @ 21% = $105,000 The difference? Same exact expenses. More money in your pocket. • $350,700 in tax savings • 77% less federal tax owed • $1.67M more deducted upfront—freeing up real working capital This isn’t just policy—it’s a powerful change in how companies like XYZ can fund growth. Instead of tying up cash in deferred deductions, this bill lets businesses reinvest in their people, products, and future growth right now. This can translate to hiring, expand more confidently, innovate without hesitation and build long-term stability. This is a significant shift in tax policy—and a meaningful edge for growth oriented businesses. When companies can recover their costs faster, they don’t sit on cash—they typically reinvest it, fueling growth that directly benefits the broader economy. That typically means more jobs, more CapEx, more innovation, and more momentum. This proposed bill offers meaningful benefits to both businesses and individuals—but this is just one simple example of the kind of impact it could have on companies investing in growth. Cash flow fuels growth and proper planning makes it sustainable. #TaxPolicy #BusinessGrowth #RDexpensing #BonusDepreciation #CorporateTax #CashFlowMatters #TaxPlanning #SmallBusiness #Manufacturing #FinanceStrategy #Section179 #MACRS #CapitalInvestment