R&D Tax Credit Eligibility Guide
Determine whether your product development, software engineering, or process improvement work qualifies.
About This Resource
The federal Research & Development tax credit is one of the most underutilized incentives available to US businesses — largely because most owners and CFOs do not know what qualifies. This guide explains the four-part test, documents which activities typically qualify and which do not, and walks through the documentation requirements that support a defensible claim.
What's Inside
The Four-Part Qualification Test
- Permitted purpose requirement
- Technological uncertainty test
- Process of experimentation
- Technological in nature requirement
Qualifying Activities by Industry
- Software development and engineering
- Manufacturing process improvement
- Product formulation and testing
- Excluded activities: funded research, reverse engineering
Documentation Requirements
- Contemporaneous records standard
- Qualified research expenses (QRE) calculation
- Employee time allocation documentation
Claiming and Audit Defense
- Credit calculation methods (Regular vs. ASC)
- Payroll tax offset for early-stage companies
- IRS audit red flags to avoid
Get Started
From Reading to Doing.
Every Best Practicify engagement begins with a 45-minute advisory session — a direct conversation with the practitioner who will lead the work, with enough information at the end to make a sound decision about whether the next step is a proposal, an RFP, or something else.