Frequently Asked Questions

Any U.S. business that pays wages to employees performing qualified research under IRC Section 41. There is no minimum revenue requirement, no industry restriction, and no company size threshold. The IRS explicitly includes software development as eligible R&D. If your work involves creating or improving software through experimentation (testing architectures, evaluating algorithms, resolving performance uncertainty) it likely qualifies. This applies to solo founders, small teams, and larger engineering organizations.

Yes. Under the startup election, qualified small businesses with less than $5M in gross receipts and fewer than 5 years of revenue can apply up to $500,000 in R&D credits annually against payroll taxes, even with zero income tax liability. A solo founder paying themselves a $100K W-2 salary and spending 70% of their time on qualifying R&D could generate roughly $4,200 per year in credits. Over 3 years of lookback with amended returns, that's $12,600+ recovered.

Every activity claimed for the R&D credit must satisfy all four criteria defined in IRC Section 41 and the Form 6765 instructions:

1. Permitted Purpose: The activity must intend to create or improve a product's function, performance, reliability, or quality. 2. Technological Uncertainty: There must be uncertainty about capability, method, or design that cannot be resolved by existing knowledge. 3. Process of Experimentation: The work must involve evaluating alternatives through modeling, simulation, systematic trial and error, or other methods. 4. Technological in Nature: The activity must rely on principles of engineering, computer science, or physical/biological sciences.

All four must be met. Activities like routine bug fixes, cosmetic UI changes, or deployment using established procedures do not qualify.

No. The IRS evaluates the nature of the uncertainty and experimentation, not the tools used to perform it. Using AI tools to brainstorm architectures, prototype solutions, evaluate alternative approaches, and resolve technical uncertainty is process of experimentation, a core element of the four-part test. In fact, AI coding tool plugins provide additional contemporaneous evidence of R&D activity that traditional approaches cannot capture.

The IRS requires taxpayers to "retain records in a sufficiently usable form and detail to substantiate that the expenditures claimed are eligible for the credit." In practice, this means: timestamped activity logs showing when R&D was performed, by whom, and on which project; technical narratives describing the technological uncertainty addressed and experimentation performed; per-employee time allocation reports showing qualifying vs. non-qualifying hours; and expense categorization tying wages to specific R&D projects. The IRS explicitly prefers contemporaneous records (documentation created at or near the time of the work) over year-end reconstructions.

Git commits are timestamped, author-attributed records of exactly when development occurred and on which projects: the definition of contemporaneous documentation. Branch naming patterns and commit messages reveal experimentation: feature branches, prototype iterations, and A/B testing are visible in the commit graph. File change statistics show the scope and nature of the work. Combined with supported heartbeat metadata, your repository history provides an evidence layer that is generated automatically as you work, not reconstructed from memory months later. The IRS accepts reasonable time estimates supported by factual evidence under the Cohan Rule, and commit-clustering analysis provides exactly that.

Form 6765 (Credit for Increasing Research Activities) is the IRS form used to calculate and claim the R&D tax credit. It's filed with your annual tax return. The form includes sections for both the Regular Credit and Alternative Simplified Credit (ASC) calculation methods. For most small businesses and startups, the ASC method produces a credit of approximately 6–8% of qualifying wages. The form requires total qualified research expenses, gross receipts history, and the resulting credit amount. A complete filing also includes supporting documentation: project narratives, time allocation reports, and an evidence reference log.

Traditional R&D credit studies are point-in-time reconstructions. A consultant interviews your engineers after the year is over, asks them to recall what they worked on months ago, and writes narratives from memory. This approach costs $5,000–$30,000+, produces documentation that depends on recall accuracy, and is weaker under audit. Continuous tracking captures R&D evidence as it happens (commit timestamps, coding sessions, supported heartbeats), creating contemporaneous records that the IRS explicitly prefers. The documentation is more accurate, more defensible, and dramatically less expensive.

Traditional R&D credit studies through specialty firms cost $5,000–$30,000+ per year, or charge success fees of 15–25% of the credit amount. A $50,000 credit could cost you $7,500–$12,500 in fees. QuarryFi uses annual flat pricing with no success fees, so a $50,000 credit costs you the same plan price as a $5,000 credit. The Free tier tracks your current tax year indefinitely at no cost. Paid plans add documentation exports, Claude Code and Codex heartbeats, unlimited AI classifications for normal use, and detailed R&E expense workflows.

Yes. The IRS allows amended returns for up to 3 prior tax years. If you've been writing qualifying software but never claimed the credit, you may be able to recover credits for those years. Automated prior-year repository lookback is planned; today, QuarryFi's repository sync and exports are focused on the active tax year.

No. This is a non-negotiable design constraint. QuarryFi reads only metadata from GitHub: commit hashes, timestamps, author identity, repo and branch names, file change counts (additions/deletions), and commit messages. No source code, no diffs, no file contents. All data resides on Cloudflare infrastructure. If QuarryFi were breached, an attacker would get a list of timestamps, project names, and R&D activity summaries, with no trade secrets, no source code, no competitive intelligence.

No. QuarryFi is documentation preparation software. It tracks development activity, classifies it against IRS Section 41 criteria, and generates supporting documentation (including Form 6765) that you provide to your CPA or tax attorney for filing. QuarryFi does not provide tax advice, does not sign tax returns, and holds zero liability for filing outcomes. Credit estimates are projections based on available data and should not be relied upon as guaranteed amounts. Always consult a qualified tax professional before claiming R&D credits.