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FinTech R&D Tax Credits

Fintech (or financial technology) is an all-encompassing term for any technology that is utilized to improve, modernize, digitize, or modify conventional financial services. Fintech companies provide services like stock trading, lending, wealth management, consumer banking, and personal finance. But, according to Forbes, this is not a novel idea; rather, it is an emerging topic currently in the spotlight for all the right reasons.

Many businesses now provide secure platforms and mobile applications to their investors and customers as the need for efficiency and transparency in finance has increased. However, expensive research is needed to develop and maintain such advanced platforms. For that reason, the federal government and the majority of US states offer the FinTech R&D tax credit that companies can use to offset up to 22% of overall qualifying costs. That said, how much exactly they can benefit from this opportunity will depend on the state where they conduct qualifying operations.

Qualifying Costs and Activities

The most QREs for the R&D tax credit in the FinTech industry center on personnel costs. That includes both people directly or indirectly involved in the research, such as cybersecurity experts, compliance managers, financial analysts, data scientists, machine learning architects, full-stack software engineers, software developers, quantitative analysts, and UI and UX developers. Furthermore, you can partially recover the funds you spent on supplies, cloud computing services, and subcontractors.

Generally speaking, qualifying research activities that can be quantified and translated into cash-back for your company include:

  • Developing new user interfaces or financial platforms;

  • Creating new applications for data modeling;

  • Evaluating and improving systems for fraud detection;

  • Improving data mining tools and carrying out statistical analysis;

  • Enhancing cybersecurity protections for current applications.

Contact our specialists if you have any questions about the FinTech research and development tax credit. We will help you pinpoint and maximize your savings potential. Moreover, we can calculate a quota for free and assist you throughout the claiming procedure.

 

FAQs

What kind of companies can apply?

Fintech companies 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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