CT-1120 RDC: Research and Development Credit (2024)
Connecticut · Connecticut DRS · Used for tax years 2024
Form CT-1120 RDC calculates Connecticut’s Research and Development Expenditures Tax Credit for 2024. It reports Connecticut research and development expenses, the allowable credit, and credits used, exchanged, or carried forward.
Who files this form
Use 2024 Form CT-1120 RDC to claim the tax credit for research and development expenses paid or incurred during the income year for research and development conducted in Connecticut.
A company with research and development expenses exceeding $200 million for the income year must obtain an eligibility certificate from the Department of Economic and Community Development (DECD) before claiming the credit.
What you'll need
- Required expense schedule: Attach a detailed schedule identifying the type and amount of research and development expenses and the Connecticut location where the work was conducted.
- Business information: Provide the corporation name, Connecticut Tax Registration Number, income-year beginning and ending dates, and DECD eligibility certificate number, if applicable.
- 2024 Form CT-1120RC figures: Part I, Line 2 asks for incremental Connecticut research and experimental expenditures from 2024 Form CT-1120RC, Part I, Line 3.
- Tax liability figures: Part II uses the 2024 Connecticut Corporation Business Tax liability after all credits other than this credit. For a combined unitary return, use the combined group's total liability.
- Credit history: Part III asks for credits earned, applied, carried forward, and exchanged for the listed years.
- If requesting an exchange: Attach Form CT-1120 RDC or Form CT-1120RC, as applicable, and all required supporting schedules and documentation to Form CT-1120 XCH.
How to file
Complete the form in blue or black ink and attach the required detailed expense schedule. Calculate the tentative credit in Part I, the 2024 credit in Part II, and the carryforward in Part III. Enter the credit from Part II, Line 7 on Form CT-1120K, Part I-C, Column B.
If applying to exchange a credit for a refund: File Form CT-1120 XCH separately from Form CT-1120 or Form CT-1120CU. Attach the credit form and required supporting information. At the same time you file Form CT-1120 or Form CT-1120CU, mail the exchange application and supporting information to:
Department of Revenue Services
Corporation Tax Audit Unit Attn: XCH
450 Columbus Blvd Ste 1
Hartford CT 06103-1837
Check the box at the top of Form CT-1120 or Form CT-1120CU indicating that you are exchanging research and development credits, and enter the requested refund amount.
The printed mailing directions above apply to the exchange application. The supplied text does not give general mailing or e-filing directions for Form CT-1120 RDC.
Common mistakes
- Using the wrong year's form: The form is year-specific. Use the 2024 form for the 2024 income year.
- Using the wrong ink or staples: Complete the form in blue or black ink only. Do not use staples.
- Leaving out the expense schedule: The form requires a detailed schedule showing expense types, amounts, and Connecticut research locations.
- Including general business overhead: Overhead and general or administrative expenses related to the corporation as a whole, rather than specifically to the research and development effort, do not qualify.
- Trying to exchange older credits: Only credits earned in the current year and entitled to be claimed in the current year may be exchanged.
Questions people ask
What counts as a qualified small business?
A company whose gross income for the previous income year does not exceed $100 million, provided it did not meet that test through transactions with a related person as defined in the cited Connecticut law. Part I, Line 4a directs qualified small businesses to multiply net research and development expenses on Line 3 by 6%.
What kinds of expenses may qualify?
Examples include experimental or laboratory research costs connected with the taxpayer's trade or business; costs of developing or improving products, processes, formulas, inventions, or similar property; and patent application costs, such as attorneys' fees. The research must be conducted in Connecticut and meet the form's expense and funding requirements.
Can unused credits be carried forward?
Yes. Unused credits earned in income years beginning on or after January 1, 2021, may be carried forward for 15 income years. Unused credits earned in income years beginning before January 1, 2021, may be carried forward indefinitely. No carryback is allowed.
Can I exchange the credit for a refund?
A taxpayer with gross income of $70 million or less who cannot use the credit because it has no Corporation Business Tax liability may elect to carry 100% of the credit forward or may qualify to exchange it for a refund equal to 65% of its value, subject to limitations. See Form CT-1120 XCH for eligibility. Only credits earned and entitled to be claimed in the current year may be exchanged.