The R&D tax credit is a specialized and underutilized part of the tax code that a significant number of orthotics and prosthetics facilities qualify for, but are not taking advantage of. Having an understanding of how broad the definition of R&D for tax credit purposes is will greatly benefit their facilities.
R&D Tax Credit for Orthotics & Prosthetics
The Research and Development Tax Credit rewards companies that invest resources in innovation and product and process improvements which help to expand our economy.
The R&D tax credit has been in existence since 1981, but recent changes made by Congress means that significantly more facilities in the O&P industry can now benefit and drop more dollars to their bottom line. Companies may also file amended tax returns to obtain refunds of previously paid income taxes, and in some cases, may be able to recapture taxes paid up to four years ago.
Innovation is a constant in the orthotics and prosthetics industry. The R&D credit rewards those facilities who are developing new or improved products, processes, and techniques that improve the quality, functionality and performance of O&P devices. Claiming the credit will help companies generate more money to reinvest in their businesses to ultimately better serve their patients.
The types of activities that may qualify for the R&D tax credit include, but are not limited to the following:
- developing and designing new orthotics and prosthetics
- testing new carbon fibers, resins, plastics, laminating sleeves, interfaces, mold releases suspension systems and other materials
- experimenting with the latest in CAD/CAM technology
- testing new techniques for assessing molds, accommodating different suspension types, and mounting orthotic and prosthetic devices
- being a designated beta test facility
- evaluating new prosthetics devices and components before they are available to the public.
- experimenting with carbon fibers, resins, plastics, laminating sleeves, interfaces, mold releases suspension systems
- developing new products with new materials or new combinations of various materials
- 3D printing of parts and components
- creating optimal conditions to achieve consistent, accurate, biocompatible, minimally invasive, securely retained, and life-like limbs
- performing technical procedures for fabricating and repairing lower and upper limb devices, bionic devices and sports devices
- implementing state-of-the-art technology
- implementing and testing state-of-the art equipment to improve processes
- developing new techniques and methods to improve the function, performance, reliability, quality, and durability of prostheses
- creating unique sockets and other components for unique patients