How the R&D credit applies to medical device and life sciences companies

The federal R&D tax credit rewards work that tries to create or improve a product or process through science and engineering, with testing along the way. Device makers and life sciences companies do this at every stage: concept, prototype, bench testing and process development. Much of that work happens before any product reaches a patient.

Florida medical device and life sciences companies claim the credit on their federal returns. Many are S corporations or LLCs, so the credit passes through to the owners, and your CPA files it with the return.

Work that often qualifies

• Designing new devices, components and software

• Building and bench testing prototypes

• Developing formulations, materials or manufacturing processes

• Developing test methods and validation approaches for new products

• Working through design changes after testing, including failed attempts

Work that usually does not

• Routine quality control and inspection

• Production after the process is settled and validated

• Regulatory paperwork on its own

• Market research and clinical outreach

Costs that count

Wages for engineers, scientists and technicians doing the work count, along with supplies and materials used in testing, and a share of what you pay outside contractors or labs. We tie each cost to a specific project so your CPA has a file that holds up if the IRS asks.

What to have ready

• A list of devices, formulations or process projects from the last few years

• The people who worked on them and roughly how much time they spent

• Lab, testing and prototype costs tied to those projects

• Design history, test reports and lab notes from the work

You do not need all of this to start. The free screening takes 5 to 10 minutes and tells you whether a full study is worth it.

We also work with medical device and life sciences companies outside Florida. The federal credit works the same in every state, and we run the screening remotely or in person.