gabrielmoreira Fondo Core Workflow B: R&D Tax Credits
Overview
Claim R&D tax credits through Fondo. Startups with US W-2 employees doing qualifying R&D can offset up to $500,000/year in payroll taxes (FICA). Fondo's CPA team prepares the Form 6765 study.
Prerequisites
- An authorized finance/tax owner, current professional guidance, complete source records, and a retention/access policy.
- A reviewed scope for any calculator or export; this workflow does not determine eligibility or replace tax advice.
Instructions
- Gather approved source evidence and classify activities/expenses for review without altering originals.
- Use an opaque case identifier and aggregate counts for workflow tracking; keep payroll, tax, and employee records in authorized systems.
- Reconcile inputs with the responsible finance professional, document assumptions and exceptions, and obtain sign-off before filing or payment actions.
- Preserve an audit trail and follow the organization's retention and correction process for any discrepancy.
Output
Create a review receipt with period, case ID, source-system references, owner, open questions, professional-review status, and next action. Do not include employee, payroll, tax-return, or bank details.
Examples
Use a fictional project and aggregate cost buckets to exercise the evidence-collection checklist. Record unresolved classification questions for the finance reviewer and confirm no filing, calculation, or payroll action is generated from the test.
R&D Credit Calculation
Qualifying R&D Expenses:
W-2 wages for R&D employees: $480,000
Contractor payments (65%): $78,000
Cloud compute (AWS/GCP): $36,000
Software tools for R&D: $12,000
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Total Qualified Research Expenses: $606,000
Credit Rate (Alternative Simplified): ~6-8%
Estimated R&D Credit: ~$42,000
Qualifying Activities
| Qualifies | Does NOT Qualify |
|---|---|
| Developing new software features | Routine maintenance/bug fixes |
| Improving existing algorithms | Marketing or sales activities |
| Building internal tools | Purchasing off-the-shelf software |
| API integrations requiring experimentation | Simple data entry or configuration |
| Machine learning model development | General management |
| Infrastructure automation | Accounting or legal work |
Timeline
| Month | Activity |
|---|---|
| Jan-Feb | Fondo collects prior year R&D data from payroll and expenses |
| Mar | CPA team interviews founders about qualifying activities |
| Apr | R&D credit study prepared, Form 6765 drafted |
| Apr 15 | Filed with corporate tax return (or extension) |
| May-Jun | IRS processes credit, payroll tax offset begins |
Payroll Tax Offset (Startups)
Eligibility for payroll tax offset (Section 41(h)):
✓ Less than $5M gross receipts in current year
✓ No gross receipts in any year before the 5-year period ending in current year
✓ Filed as election on Form 6765
Offset: Up to $250,000 per year against employer FICA (6.2%)
Up to $250,000 per year against Medicare (1.45%)
Total: Up to $500,000/year in payroll tax savings
Error Handling
| Issue | Solution |
|---|---|
| Credit lower than expected | Review qualifying activity classifications with CPA |
| Missing contractor data | Upload 1099 forms to Fondo dashboard |
| Late filing | File extension (Form 7004) before April 15 |
| IRS audit of R&D claim | Fondo provides audit defense documentation |
Resources
Next Steps
For troubleshooting, see fondo-common-errors.