Blockchain R&D Tax Credits

Blockchain is a shared ledger used to record transactions, monitor assets, and generate trust. Since its creation in October 2008, this network has expanded to accommodate a multitude of cryptocurrencies that have gained popularity. That makes blockchain development more important than ever, given the normalization of cryptocurrencies and the growing popularity of Blockchain-as-a-Service (BaaS). Such open-source technologies help companies track any data set safely across various apps.

However, it takes a lot of research and development to process and store vast volumes of data and enhance the tracking systems that are currently in use. As a result, blockchain businesses that test, develop, or work on securing platforms are eligible for the Blockchain Technology R&D tax credit. The incentive reimburses up to 22% of expenses for innovation, but the amount can change according to the specific state’s tax laws.

Qualifying Costs and Activities

Qualifying R&D is found in operations where you’re developing your own blockchain or are working on fixing issues in the current ones. Some examples include:

• Improving a blockchain platform’s performance and quality;

• Enhancing data security and privacy;

• Creating new software for sensitive data (such as electronic health records);

• Making smart contracts (like peer-to-peer loans and lease agreements);

• Working on blockchain source code security.

Four major pools of costs qualify for the R&D tax credit in the Blockchain Technology industry: cloud computing services, supplies, employee salaries, and subcontractor expenses. Essentially, it means you can partially recoup wages for employees like blockchain engineers and developers, security and QA engineers, computer scientists, UI designers, legal consultants, and project managers.

Contact us if you need assistance computing or applying for the Blockchain Technology research and development tax credit. We can provide complete, end-to-end claims or an advisory service tailored to your unique case.

FAQs

What kind of companies can apply?

Blockchain developers that conduct qualifying research activities.

What data do I need to calculate credit?

Claim period gross receipts.

What information do I need to provide?

General ledger expense detail, payroll records, project notes, project lists, emails, purchase orders, and other documents regarding QREs for the claiming period.

Is credit carryforward an option?

Yes, up to twenty years.