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Cryptocurrency R&D Tax Credits

Cryptocurrencies have taken the world by storm. In fact, there are currently more than 12,000 cryptocurrencies that institutions, investors, and consumers actively use. However, these digital assets need to be stored in a decentralized, secure manner on the blockchain to protect user privacy. Thanks to the extensive R&D, small companies continue to impact market share with new cryptocurrencies and advancements in the blockchain.

Research and development operations such as developing a new digital currency, producing source code, or releasing a cryptocurrency application are usually eligible for the Cryptocurrency R&D tax credit. Businesses use this tax relief to defray a sizable portion of their expenditures. Although the refunds can go as high as 22% of the QREs, the location generally dictates the exact amount. The reason behind this is that every state has different credit requirements.

Qualifying Costs and Activities

Four primary types of expenditures qualify for the R&D tax credit in the Cryptocurrency industry: cloud computing services, supplies, employee salaries, and subcontractors. That means you can partially recover the money invested in blockchain and full-stack engineers, UI and UX consultants, C-suite, cryptocurrency analysts, solidity strategists, data scientists, and smart contract developers.

However, to justify your claim, your company must invest in one or more of these qualifying activities:

  • Decentralized application development and implementation (dApps);

  • Programming to create new financial network tokens and digital currencies;

  • Analyzing and fixing source code;

  • Incorporating cryptocurrency software;

  • Developing and introducing new mobile payment applications or wallets.

Contact us if you think you meet the requirements to take advantage of this tax savings opportunity. We can provide consultation and help calculate your Cryptocurrency research and development tax credit.

 

FAQs

What kind of companies can apply?

Cryptocurrency 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.

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