R&D Tax Credits for Software and Website Development

Software and website development are often overlooked areas when it comes to R&D tax credit analysis. However, the R&D tax credit was created to reward all companies for improvements to products and processes, including those in the software and website development field. Software and website development can be a qualifying activity for R&D purposes when it is used for implementing a new system or process. The amount of R&D required to develop new software and website designs makes companies involved in these activities ideal candidates for claiming the tax credit. Additionally, many states offer R&D tax credits that can further reduce a software or website development companies state tax burden.

Typical Qualifying R&D Credit Activities for Software and Website Developers

  • Programming software source code
  • Designing and developing the structural software architecture
  • Establishing electronic interfaces and functional relationships between various software modules
  • Conducting requirements, domain, software elements, or scope analysis for a new functional software enhancement
  • Evaluating and establishing functional specifications
  • Conducting unit, integration, functional, performance and regression testing
  • Compiling and testing source code
  • Developing new or improved technologies
  • Activities for a company committed to the advancement of innovative research related to the introduction of new and innovative software and website development may include:
    • Developing new software packages that interface directly with client webpages and the internet
    • Analyzing, modeling and evaluating multiple concepts and solutions for performance and functionality
    • Coding and application development
    • Alpha and Beta testing prototype development and release updates
    • Database design
    • Development of case studies for functionality and performance evaluation
    • Merging and integration of legacy systems with new platforms or releases
    • Back-end development of new software applications and platforms utilizing source code developed in a programming language such as C++ or Java, which ties in to a web-based front
    • Core infrastructure development
    • Usability testing
    • Cloud side services development

Please contact us to learn more about VeraxLaw’s R&D tax credit services and what we can offer your software and website development company.