R&D Tax Credits Provide Cash Incentives for Mobile App Developers

R&D Tax Credits Provide Cash Incentives for Mobile App Developers

Posted by Jeffrey Feingold on 02.14.18

Today’s mobile devices function as phones, computers, cameras, maps, entertainment and people across the world have them on hand around the clock. With the colossal success of iPhones, as well as the launch of Google-backed Android phones, businesses are now turning to app development to keep up with consumer buys, likes and trends. To stay ahead of competitors in innovation, companies must do a tremendous amount of research and development to create powerful high quality apps from new ideas. Companies developing and researching new mobile app technology should be putting the R&D tax credit to use. Unfortunately, many developers may not be aware that the activities they are performing today can qualify them come tax season. The R&D tax credit is a benefit that provides cash incentives for companies conducting research and development in the United States. Mobile app development is still a relatively young industry, with a lot of new start ups, which makes the R&D tax credit a perfect opportunity for app builders to get cash back for continuing their innovations. One thing is certain, and that is mobile app tech is going to dominate all things technological in the coming years and the advancement is happening daily. 

What Qualifies as Research and Development? 

  • Development of a new product- including inventions and patents
  • Improving a product’s quality, reliability, or function
  • Developing or improving software products
  • Research to improve business performance
  • Payments to employees who work on research projects in your business
  • Payments to any third parties who conduct research for your business

Some examples of the app development and design activities that might qualify for the tax credit are;

  • Programming app source code
  • Alpha and beta prototype development and testing
  • Designing and developing the structural application architecture
  • Establishing interfaces and functional relationships between various app modules
  • Engineer new data collection methods
  • Improve or develop new app security (i.e.; banking industry)
  • Conducting requirements, domain, software elements or scope analysis for a new functional app enhancement
  • Evaluating and establishing functional specifications
  • Developing the use of location-based Wi-Fi
  • Creating a proprietary game engine
  • Compiling and testing source code
  • Developing new or improved Mobile Payment Integration technologies via mobile commerce
  • Development on the integration on more connected devices via cloud technology

App developers are often among the strongest candidates to benefit from the R&D tax credit due to their cutting edge app technologies being used across industries from retail to banking. Most states also offer state R&D tax credits that can significantly reduce an app developer's state income tax burden.

All app development activities must meet this four-part test to qualify for the R&D tax credit.

We are a dedicated and highly specialized team focusing on assisting clients maximize their R&D tax claims. To learn more about Tax Point Advisors’ R&D tax credit services for mobile app developers, call us at (800) 260-4138, or please leave us a message below.


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