What expenses qualify for the R&D credit?

There are different types of expenses that can be included in your calculation of the R&D tax credit:  

1. WAGES - Often the largest component of qualifying expenses. Qualifying wages are W-2 Box 1 wages paid to U.S.-based employees, and wages earned by company owners.

• Employees include engineers, designers, direct supervisors, etc. 

2. CONTRACT EXPENSES - 65% of any payments made to U.S.-based contractors.

• Contractors include third-party developers, manufacturers, etc. 
  
  

3. SUPPLIES - Non-capital/non-depreciable materials, as well as tools that were used or consumed in the development process.

• Supplies include web services, prototype materials, etc.