🔬 Understanding Tax Credits: Section 174 vs. Section 41 🔍

Are you confused about tax credits, especially when it comes to Section 174 and Section 41? Let me simplify it for you!

Section 174 Expenses:

Also known as Research and Experimentation (R&E) Expenses.

Split into two categories based on activity importance.

Include various research costs, but not all qualify for tax credits.

Section 41 Expenses:

Referred to as Research and Development (R&D) Expenses.

Focus specifically on "Direct Research Expenses," the core of R&D.

A subset of Section 174 expenses, focusing on costs eligible for the R&D Tax Credit.

In simpler terms, Section 174 covers a wide range of research costs, while Section 41 narrows down to the expenses that earn you tax credits.