For companies developing software, there are certain expenses associated with creating this software that might be qualifiable for the R&D tax credit. These qualified expenses can be classified into the following categories:
Qualified Cloud Hosting Expenses | Description |
Cloud Hosting for Development | Development sandbox for validation/testing, staging, simulation, etc. |
Code Repositories | Code repositories used for development purposes (e.g. Github) |
Unfortunately, having invested money in purchasing your own servers would not qualify for the credit. This is only for hosting that is A) not on-premises, and B) not owned by the taxpayer.
Important
Purchasing servers would not be qualifiable for the R&D tax credit, even if those servers are utilized in development. Only subscription or use-based, cloud services such as Amazon Web Services (AWS), Google Cloud, Microsoft Azure, Heroku, etc. would qualify.
State
For computing costs, regardless of where the actual vendor is located or where the invoice is sent, the costs can be attributed to the state where significantly all of the development activity took place.
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