Congress first approved the “temporary” research tax credit in 1981, and it’s been renewed 17 times since, often retroactively to its prior expiration. On Dec. 31, 2014, the research credit expired yet again. The congressional track record of continually renewing this credit suggests that it’ll be available again in 2015. To be prepared, manufacturers engaged in research activities should understand when and how to claim these credits. Even if the credit isn’t extended, you might be able to save tax by filing amended returns to claim the credit for recent years.

To be eligible for the research credit (also commonly referred to as the “research and development” or “research and experimentation” credit), a business must have engaged in “qualified” research activities. To be considered “qualified,” activities must meet the following four-factor test:

1. The purpose must be to create new (or improve existing) functionality, performance, reliability or quality of a product, process, technique, invention, formula or computer software that will be sold or used in your trade or business.
2. There must be an intention to eliminate uncertainty.
3. There must be a process of experimentation. In other words, there must be a trial and error process.
4. The process of experimentation must fundamentally rely on principles of physical or biological science, engineering or computer science.

Among those activities specifically excluded from the credit are reverse engineering an existing product, research related to social sciences, arts or humanities, software developed for internal use, and research performed outside the United States and its territories and possessions. Research that’s funded or reimbursed by someone else via a contract, grant or other arrangement is also excluded.

Expenses that qualify for the credit include wages for time spent engaging in supporting, supervising or performing qualified research, supplies consumed in the process of experimentation, and 65% of any contracted outside research expenses.

There are three options for computing research credits:

Keep in mind that amended returns may be filed to claim research credits up to three years back, potentially allowing you to reap refunds from previous years.

Claiming research credits can be tricky. Alternative minimum tax issues could undermine your plans to use these credits. On the other hand, if your state also offers credits for research activities, the research credit may be even more significant than you initially anticipated. So discuss with your tax advisor whether it’s worth pursuing — and for the latest on whether Congress extends it again for 2015.