R&D tax credit report

/finance/rd-report calculates Qualified Research Expense (QRE) for the IRS §41 R&D credit, by year. Pull this when filing — your tax preparer uses the breakdown to substantiate.

What counts as R&D

Under §41 the work must be: 1. Technological in nature 2. Resolve uncertainty about a product/process 3. Involve experimentation 4. Aim to improve function, performance, reliability, or quality

Practically: new product development, algorithm work, prototypes, feasibility studies, applied research. Not R&D: routine maintenance, cosmetic changes, market research, customer support.

How OtiumWork classifies R&D

Two flags determine whether hours qualify:

• Project-level (project.rd_qualifying) — set on the project edit form, or in bulk via the R&D bulk tagger. When checked, all hours on this project default to qualifying.
• Task-level (task.rd_qualifying) — overrides the project setting. Use when only specific tasks within a non-R&D project qualify (e.g., an algorithm rewrite task on a maintenance project). NULL = inherit from project.

How QRE is computed

For each event whose effective rd_qualifying = 1:

employee QRE   = sum(hours × hourly_cost)  for W2 employees
contractor QRE = sum(hours × hourly_cost) × 0.65  for 1099 contractors
total QRE      = employee QRE + contractor QRE

The 0.65 factor on contractors is the §41 rule — only 65% of contractor research expense counts.

Bulk tagging retroactive years

/finance/rd-tagger lets admin/finance scan project names and descriptions for keywords (default: research, engineering, feasibility, prototype, R&D, etc.), preview matches, and bulk-flag them. Use this to backfill 2024-2025 imported projects from Clockify; for new projects flag at creation time.

CSV export

Each year's report has a Download CSV button at the top — gives the tax preparer summary + per-project + per-employee tables in one file.

Caveats

• This is an input to the tax credit, not the credit amount itself. The IRS has additional rules (base amount, ASC vs RRC method, prior-year averages) that depend on your tax method.
• Hours data is the substantiation; salary/cost amounts feed the dollar QRE.
• Contractor classification depends on the employment_type field — set per-employee at admin → Employees.