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Software

R&D Tax Credits

Stats At A Glance

55%

Average of total software development expenses that typically qualify

$250,000

The amount qualified startups can offset payroll taxes per year

$48,000

2020 federal tax credit of a small software company with 5 employees

Qualified Research Expenses (QREs) include investments in almost all phases of the Software Development Lifecycle (SDLC) - as well as more concrete expenses, such as cloud server rental expenses related to R&D activities. The R&D Tax Credit provides opportunities for software companies of all sizes in almost any industry to offset tax liabilities. In addition to the federal credit, many states offer tax breaks. Pre-revenue companies and start-ups with less than five years of revenue can use the federal R&D tax credits to offset future payroll taxes.

The following software and technology industries have claimed significant R&D tax credits, receiving much-needed capital to reinvest in their workforce, infrastructure, and continued innovation:

Artificial Intelligence

Blockchain 

Cryptocurrency

Building Systems Controls

Electronics

Information Technology 

FinTech

Product Engineering

Robotics

Telecommunications

Video Game Development

VR/AR Development

Example activities that qualify:

  • Mobile application development

  • Software as a Service (SaaS)

  • Developing source code, including machine learning and artificial intelligence

  • Integration and customization of third-party applications (e.g. Salesforce)

  • Designing software for cloud-based integration

  • Assessing and instituting functional specifications, including UI/UX

Do you have these job titles on your payroll, or do you hire third-party contractors to do these jobs?

  • Back-end/Full-stack Developers

  • C-Suite

  • Data Scientists

  • Product Managers

  • QA/QC Staff

  • Research Analysts

  • Software Developers

  • Software Engineers

  • UX/UI Engineers

Unsure of whether your software and technology projects qualify? The innovations your company has been working on may be eligible for significant tax breaks. Dr. Tax Credit Advisory, LLC employs tax experts, and technologists, with years of experience in R&D Tax Credits. At Dr. Tax Credit, we work on a success-based fee structure enabling businesses in the software & technology industry to claim R&D credits/refunds without any out-of-pocket costs. We offer complete audit protection and a money-back guarantee. Contact one of our experts today.

The R&D Tax Credit was created to incentivize companies across multiple industries to keep high-tech jobs in the United States. Companies can claim employee wages, supplies & raw materials, computer rental costs, and third-party contractor expenditures incurred throughout the R&D process. Current law permits companies to amend prior year tax returns (going back three years), offering additional financial benefits from tax refunds. If you cannot use the R&D credits immediately, the IRS allows taxpayers to carry credits forward up to 20 years.

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