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Adjusted Credit

Adjusted Credit

Adjusted Credit Variables

Eligible businesses claiming the Research and Development (R&D) Tax Credit must determine their claimable credit before offsetting payments (if applicable) and filing their annual tax return.

If the Proration Notice includes a proration percentage for the applicable tax year, the business must first calculate its adjusted credit using:

  • Unadjusted credit, which would have been submitted with the R&D Credit Application, and
  • Proration percentage, available in the Proration Notice for the tax year being claimed

Claim Credit

Proration Notice

Calculate Adjusted Credit

Calculate the adjusted credit by multiplying the proration percentage by the unadjusted credit.

Adjusted credit = proration percentage × unadjusted credit

If the Proration Notice for the tax year being claimed indicates that no proration is necessary, then the unadjusted credit does not need to be adjusted before the eligible business claims the credit on the annual return.

Example

Inputs:

  • Unadjusted credit: $100,000
  • Proration rate: 90%

Adjusted credit: 90% × $100,000 = $90,000