How difficult (or how does one) apply for R&D Tax Credits (USA) for software development (new product)?


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We are developing a new web-based product.

Looking for feedback from people who have applied for such tax credits.

  • What are the steps to applying for an R&D Tax Credit?
  • How difficult was it is (rough estimate of your time and your CPA time)?

Here's a little information that suggests our software would qualify.

Tax USA

asked Mar 27 '13 at 23:17
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Clay Nichols
737 points

2 Answers


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Your accountant will tell you whether or not you are elligible. Any information you get here would be speculation, based on no actual evidence.

answered Mar 28 '13 at 01:01
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Gary E
12,510 points
  • Never claim business credits without proper CPA review – Littleadv 5 years ago
  • @GaryE -That makes sense, but I am still interested in how difficult it is. And feedback from a few people (even one ) who have done it would be very helpful. If it's 30 hours of CPA time @ $200/hr then it's simply not worth spending a lot of time looking into. If it's 2 hours of CPA time and 1 hour of my time then that warrants spending my limited time on. – Clay Nichols 5 years ago
  • No one here can tell you unless they know your complete business details, which you have not provided. Your accountant *(I assume you have one)* can answer the question in 2 **minutes**. – Gary E 5 years ago
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After PATH Act was introduced in 2015, the R&D tax credit became permanent and available for startups and small companies with $250,000 maximum amount to claim. Software development is eligible as long as it passes the Four Part Test (systematically resolved technical uncertainty).
You will need technical documentation and employee time-sheets to substantiate the R&D tax credit claim. Otherwise you risk to not be able to defend your claim in case of an audit.

Unfortunately, most CPAs are not qualified enough to determine eligibility. There are R&D tax credit advisors that specialize in this area and collaborate with business owners and accountants.

answered Apr 10 '18 at 01:47
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