One package, issued together, in which every document reconciles with the others and every figure traces back to your records.
The QRE workpapers and the audit-defense binder stay with your Ricerca team and are produced for an examination.
The credit is not the whole benefit. The same substantiated base supports the rest.
How it is priced. A written quote before any work begins, fixed at engagement-letter signature, with no obligation to go ahead.
Each one is written the way a study is built: statute first, then how it plays out in a real company, then what has to be on paper.
The §41(d) test every activity has to clear - each part in plain English, with examples and the shrink-back rule.
Read the testWhich wages, supplies, cloud spend, and contract dollars actually count toward the base - and which are excluded outright.
See what countsRegular vs. Alternative Simplified, the fixed-base percentage, and the §280C reduced-credit election, compared side by side.
Compare methodsHow a qualified small business turns up to $500,000 a year of credit into payroll-tax cash before it ever owes income tax.
See the offsetWhat examiners ask for, what Form 6765 now reports, and what a record that survives an exam actually looks like.
Get audit-readyStraight answers on eligibility, timing, amended returns, forms, state credits, and audit exposure - in one place.
Browse the FAQPrefer a number before the reading? Run the R&D tax credit calculator - it stays in your browser - or answer three questions and our R&D experts will come back with a free assessment.
The statute itself, the forms that claim the credit, the elections that change it, and how it sits next to §174A and the states.
Codified at Internal Revenue Code §41, the research credit reduces federal income tax dollar-for-dollar for companies that develop or improve products, processes, software, techniques, formulas, or inventions. It was enacted in 1981, extended more than a dozen times, and made permanent by the PATH Act of 2015 - which is what makes it something to build a repeatable process around rather than a one-off.
It is not a deduction. A deduction reduces taxable income; the credit reduces tax owed. And for a qualified small business, up to $500,000 per year of it can be applied against employer payroll taxes - real cash for a company that is years away from an income tax bill.
The credit is also separate from how you deduct research costs. For tax years beginning after December 31, 2024, the §174A expensing rules allow immediate deduction of domestic R&E, so a well-run study captures the deduction and the credit together - and coordinates them under §280C rather than treating them as unrelated line items.
Everything downstream depends on one thing: whether an activity is qualified research. That is the four-part test, and it is where an examination starts.
Each row is the short version of a full guide.
Every qualifying activity must pass all four parts, and it is the first thing an IRS examiner works through. The test applies at the level of the business component, and when a whole product fails, the shrink-back rule lets you test a subset of it instead.
Four categories of qualified research expenses (QREs) form the base, and nothing else: wages are usually the largest by far. Excluded under IRC §41(d)(4): research after commercial production begins, adaptation or duplication of an existing component, surveys and studies, routine data collection or quality control, the social sciences, arts or humanities, research outside the United States, funded research, and internal-use software that cannot meet its higher threshold. A study screens for every one of these before a dollar is claimed.
Two methods run on one QRE base, and we compute both. The Regular Credit takes 20% of the QREs above a fixed-base amount built from your historical ratio of research spending to gross receipts (a base never less than half of the current year’s QREs). The Alternative Simplified Credit takes 14% of the QREs above 50% of the average for the three preceding years, or 6% of current-year QREs where any one of those years had none. §280C(c) then decides whether you reduce the research deduction or claim a reduced credit.
Net federal benefit commonly lands around 6-10% of QREs. That range is illustrative: the real number falls out of your QRE trend, your base period, and the §280C posture. Open the calculator.
“We’re not a lab, so we don’t qualify.”
The statute rewards technical problem-solving, not lab coats. Software, manufacturing process work, and hardware development routinely qualify.
“It only counts if the project worked.”
Qualification turns on the process of experimentation, not the outcome. Abandoned and failed efforts can still qualify - sometimes they document the uncertainty best.
“We’re too small,” or “we’re pre-revenue.”
A qualified small business can elect to apply up to $500,000 per year of credit against employer payroll taxes - cash before income tax is ever owed.
“Our accountant would have told us.”
Generalist firms often skip it, because capturing it well means mapping each activity to the four-part test and substantiating the number by business component.
One more: the federal credit is not the whole benefit. Most states with a corporate income or franchise tax - Pennsylvania among them - run their own R&D incentives that sit on the same substantiated base, and several are refundable or transferable. We keep the focus here on the federal credit and factor state credits into your study where they apply.
What qualifies is identical everywhere. What proves it - travelers and first-article reports, sprint histories, batch records, test logs - is not.
See all industries. Not listed? The test is industry-neutral - tell us what you build.
The R&D credit is about what your team builds. A cost segregation study is about the building you build it in.
A study splits a building’s cost into the parts the tax law lets you depreciate faster: 5-, 7- and 15-year property instead of one 27.5- or 39-year building.
Manufacturers, engineering and architecture firms, labs and medical device makers often own the building the research happens in. How the two studies divide the costs without double counting.
Longer articles from the blog on the questions that decide real claims: Section G, funded research, examiner requests, and worked numbers.
Prefer to read the law yourself? Start with the statute, the regulation, and the IRS.
Tax law evolves and IRS guidance is revised; verify current rules with a qualified professional before acting.
More questions than these? Browse the full R&D credit FAQ.
Tell us what your team builds and roughly what you spend on it. Our R&D experts come back with whether the work looks like qualified research under §41, what a study would capture - credit and §174A deduction - and what it costs. Free, and no obligation.
We typically reply within one business day.
