R&D Tax Credit Management

The R&D tax credit, also known as the Credit for Increasing Research Activities, helps businesses offset federal income tax liability by claiming eligible development costs and qualified research expenses. Some states offer additional tax incentives. If your credit exceeds your tax due, you may carry forward the unused credit to future tax years.

Recent changes (including provisions in the Tax Hikes Act) now require that many qualified research expenses be amortized over five years instead of being deducted immediately. That’s why good business records, employment records, and financial records are more important than ever. Chrono helps simplify the documentation process and keeps you ready for a credit audit techniques guide–style review.

Yes. Even if you don’t owe federal income tax, you can apply the R&D credit against payroll taxes if you're a qualifying startup. In this case, your annual credit balances carry real value. Chrono helps surface these tax credit opportunities by tracking real-time development activities across your stack.

Chrono automatically links work activity to qualified research activities in real time, across business units, projects, and devs. It surfaces eligible expenses you might miss in a spreadsheet, such as hours tagged to internal tooling, test automation, or eligible employees contributing to an eligible investment project. So, your R&D claim reflects not just the work you’ve done, but the team effort behind your company’s core values.

Absolutely. Many software and product teams qualify through activities like API development, performance testing, and algorithm design. As long as you're working to solve uncertainty and improve a business component, those development activities could count. Chrono tracks this in the background so you don’t miss what qualifies.

Let’s say your team develops an improved product using internal testing, prototyping, and software updates. You pay qualified engineers and record their hours in Git and Jira. The wages paid, tools used, and business component improvements may count as qualified research activities. That means they’re qualified expenses under the R&D tax credit rules.

Calculating your credit typically starts with identifying your qualified activities and tallying up qualified expenses, like wages, supply costs, and contractor fees. Then you compare those to a base amount tied to past R&D efforts. Your annual report, financial services team, or Chrono’s tracked data can help you capture the full dollar credit you're owed.

You’ll need detailed support like business records, employment records, time logs, project descriptions, and financial records. Chrono auto-captures this from tools like Git, Jira, and calendars. This reduces manual work and eliminates gaps in your annual tax performance report so you can meet CRA/IRS documentation requirements.

To qualify for certain preferences, some jurisdictions require maintaining at least 90% of your employment average over the past three years. If that drops, you may need to repay half the claimed credit. Chrono lets you track eligible employees over time so your business management team doesn’t get caught off guard.

Yes, but it depends on the grant type. The IRS specifies that if your research activities are funded by another party, such as through a grant or contract, and you retain no substantial rights in the research results, those expenses may not qualify for the R&D tax credit. However, if you retain substantial rights and bear the economic risk, you may still be eligible. Chrono makes it easier to align state or federal tax credits, track costs, and stay ready with clean documentation across every eligible project.