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đ The R&D Tax Credit: Yes, Contractor Costs Can Count (But Only If You Set It Up Right)
Most tax prep offices assume the R&D credit is âfor manufacturers and labs.â
If youâre building or improving tech-enabled tax workflowsâand you pay contractorsâyou may be leaving money on the table.
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The Big Idea
Contractor payments can be included in your R&D credit calculation as Qualified Contract Research Expensesâgenerally 65% of what you payâif the work qualifies and the contract structure supports it.
đ What Contractor Work Can Qualify (Realistic for Tax Offices)
Think innovation inside your firm, not routine tax prep:
- Building/improving a client portal
- Automating document intake + OCR categorization
- Creating a workflow engine for returns/review/QA
- Enhancing data validation (error detection, anomaly logic)
- Security improvements (access controls, audit trails)
- Integrations (transcript tools, e-sign, bookkeeping feeds)
If itâs technical, involves uncertainty, and youâre testing/iterating to reach a better result â it may fit the R&D rules.
đ« What Usually Doesnât Qualify
- Seasonal contractor prep work (returns, data entry, admin)
- Marketing / market research
- Training programs
- General business process changes without âtechnical experimentationâ
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đ The R&D Tax Credit: Yes, Contractor Costs Can Count (But Only If You Set It Up Right)
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