How It Works

Projects qualify when they involve:

• Technical uncertainty: You didn't know if it was possible or how to do it
• Process of experimentation: Your team tested alternatives or iterated on solutions
• Technological in nature: Relied on engineering, computer science, or physical sciences

We walk you through a simple set of questions (called the "four-part test" by the IRS) for each project to see if it qualifies.

• Headcount reports: Employee names, job titles, departments
• Payroll data: W-2 wages by employee and year
• Contractor invoices: Payments to U.S.-based vendors for R&D services
• Prior tax returns: For calculating base amounts (if using Standard Method)
• Gross receipts: Annual revenue for the credit period

Most payroll systems export this data directly. We accept standard CSV format.

Each employee gets a personalized link to a simple survey that asks:

• What projects did you work on this year?
• What percentage of your time was spent on each project?
• What technical challenges did you face?

Surveys are designed to be completed in under 5 minutes and are mobile-friendly.

Credit method: Standard Method vs. Simplified Method

• Standard Method is based on historical R&D spending ratio
• ASC is based on the last 3 years of R&D expenses — often better for newer or growing companies

Section 280C election: Reduce the credit to avoid reducing your R&D expense deduction

TaxHound calculates both methods and shows you which maximizes your benefit.

Tax Forms:

• IRS Form 6765 (Credit for Increasing Research Activities)
• State credit forms (California and others)

Audit Support Documentation:

• Methodology memo explaining your credit calculation approach
• Project listings with qualification questionnaires
• Employee-to-project activity matrices
• Contractor invoice qualifications
• Summarized qualifying R&D expenses
• Base amount computation workpapers
• Final credit computation summary