🚀 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 “for manufacturers and labs.”

If you’re building or improving tech-enabled tax workflows—and you pay contractors—you may be leaving money on the table.

✅ The Big Idea

Contractor payments can be included in your R&D credit calculation as Qualified Contract Research Expenses—generally 65% of what you pay—if the work qualifies and the contract structure supports it.

🔍 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 it’s technical, involves uncertainty, and you’re testing/iterating to reach a better result → it may fit the R&D rules.

🚫 What Usually Doesn’t Qualify

Seasonal contractor prep work (returns, data entry, admin)
Marketing / market research
Training programs
General business process changes without “technical experimentation”

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