Atlanta health clinic accountant,

Health Clinic Tax Planning: Research & Development Tax Credits

The Tax Cuts and Jobs Act introduced several changes that may impact health clinic tax planning. R&D tax credits for health clinics may help you reduce income tax liabilities. Depending on the expenses reflected in your healthcare bookkeeping, these tax credits may represent savings of hundreds of thousands of dollars.

Unfortunately, a large number of health clinic CPAs may not be taking full advantage of the R&D tax credits for health clinics because of misconceptions about the qualifications to receive this credit. There are usually four key misconceptions:

· Defining activities that qualify as research

· Identifying expenditures that qualify for credits

· knowing what documentation should be included in health clinic bookkeeping to support research

· understanding how businesses use the credit

When healthcare accountants have a clear picture of these topics, they should be able to better determine if their healthcare clinic can include the R&D tax credit as part of their health clinic tax planning. Our medical practice accountants here at Fusion CPA understand the intricacies of health care accounting and we are here to help if you are noticing poor execution from your accounting team.

What Changes Did the TCJA Make to R&D Tax Credits?

In 2015, the Protecting Americans from Tax Hikes Act not only made R&D tax credits a permanent part of tax law, but it also expanded the application to include small businesses and startup companies. In 2018, the TCJA maintained these provisions as part of tax law.

Since the R&D credit is a permanent part of the tax law, health clinic accountants can incorporate it into their yearly tax planning strategy. Fusion CPA has a team of health clinic CPAs who are experienced in handling R&D credits. We can show you how your healthcare facility may be able to limit its tax liability using these credits.

How Can a Healthcare Facility Determine If They Are Eligible for R&D Credits?

If your health care clinic faces and resolves tax challenges, you may qualify for the R&D tax credit. The IRS has created a four-part test that can help you determine if you meet the criteria needed to receive this credit. Even though you may consider your healthcare clinic's activities to be typical, after comparing them to this four-part test, you may realize that you are engaged in innovative activities.

  • your healthcare clinic may need to prove that it’s qualifying work attempts to eliminate uncertainty surrounding the development or improvement of a process or a product
  • your healthcare clinic may need to show that it uses trial and error, modeling, simulation, or other methods and that it has explored alternatives when trying to reach the desired result
  • the processes used for experimentation should be based on accepted science, including biology, engineering, physics, computer science, or chemistry
  • the purpose of the research should be to improve or create a process or product that results in increased quality, reliability, function, or performance

After reviewing this four-part test, a good deal of healthcare clinics may realize that their daily activities may qualify for R&D tax credits. After reviewing your company’s operations, you will need to use your healthcare bookkeeping to document, identify, and support qualifying R&D activities.

Helpful Support from Experienced Financial Advisers

Fusion CPA is a firm experienced in health clinic tax planning. We can work with your team to create tailored strategic tax planning that may identify ways that you can minimize your tax liability. We are ready to assist with your health clinic bookkeeping and financial planning. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!


This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.