Why software companies qualify
The four-part testNew features count as R&D
A feature or architecture only has to be new to your company to count. It does not need to be new to the industry.
Every build has unknowns
Will it scale, and will it perform under load? Answering that is qualified work.
Iteration is experimentation
Prototypes, failed builds, and refactors satisfy the experimentation test. Your version history is the evidence.
The science is already there
Your work rests on computer science. For developers, the science test is the easy part.
A short study shows which of your projects qualify, and proves it. Read the four-part test in the words of the statute.
What qualifies in practice
Work your team already does- New product developmentDesigning and building an application or platform from the ground up is qualified development.
- Architecture and scalingWorking out how a system handles more users, data, or load takes alternatives and testing. That counts.
- Algorithm developmentDeveloping search, matching, pricing, or scheduling logic that has to perform is technical iteration on the record.
- IntegrationsMaking your system work with another platform's data or API raises questions solved by trial.
- Performance and reliabilityDiagnosing and fixing a latency, concurrency, or uptime problem is documented problem solving.
- Data and machine learningBuilding models and pipelines and testing whether they perform is experimentation with a paper trail.
- Security and infrastructureDesigning authentication, encryption, or deployment for a new requirement is qualified work.
- Testing and QAWriting and running tests that prove a new build works is part of the experimentation, and the time counts.
Where the credit comes from
The expenses that countDeveloper wages
The time your developers, product managers, and QA staff spend on qualified projects is the largest piece for most companies.
U.S. contractors
A share of what you pay U.S.-based contract developers on qualified work counts toward the credit.
Cloud computing
Hosting and computing used for development and testing environments can count as well.
What does not count
Routine maintenance, offshore development, customer support, and marketing stay out. The study draws that line honestly.
Common questions
We build internal tools, not a product. Do we qualify?
Sometimes. Software built for your own administrative use faces a higher bar. Software you sell, license, or use to deliver a service to customers does not.
We use offshore developers. Does that hurt?
Work performed outside the United States does not count. The work your U.S. team and U.S. contractors do still qualifies on its own.
Do bug fixes and maintenance count?
Routine maintenance does not. Fixing a problem that required a redesign, or a fix nobody knew how to make, does.
We are pre-revenue. Is the credit any use to us?
It can be. A young company with little income tax may be able to apply the credit against payroll taxes instead. The study covers which route fits.
How far back can we claim?
Up to three prior tax years, by amended return. Credits you never claimed are still there to collect.
What records do we need?
The ones you already keep. Commit history, tickets, design documents, sprint records, and payroll are the evidence. The study organizes them against the test.
What happens if the return is examined?
The people who wrote the study answer for it. Audit defense is included in every study at no added cost.
Which form does the credit go on?
Form 6765, filed with the return. From there it carries onto Form 3800 as part of the general business credit. The Form 6765 guide and the Form 3800 guide walk a CPA through both.
Thirty minutes shows whether you qualify.
Book a call and bring the person who knows the work. We will cover whether your projects qualify and what a credit could be worth.
Book a call Or write to inquiries@thefoundryfirm.com