R&D tracking that protects your tax credits

Software development activities that involve technological uncertainty, a process of experimentation, and are technological in nature may qualify under the IRS four-part test for Section 41 R&D tax credits. This includes developing new software, improving existing software architecture, and building internal-use software that meets the high threshold of innovation test. ClickTime helps you document the labor hours tied to these qualifying activities with audit-ready records that map directly to qualified research expense categories.

R&D tracking creates the contemporaneous documentation the IRS requires to substantiate tax credit claims. Without it, companies risk losing credits entirely—nearly 25% have lost R&D tax credits due to inadequate documentation. ClickTime ties every R&D hour to project codes and cost categories at point of entry, with approval workflows and timestamped audit trails that meet IRS standards for qualified research activities.

The IRS expects contemporaneous records that show which employees performed qualified research activities, how many hours they spent, and which projects those hours supported. You also need to demonstrate that the work involved technological uncertainty and a process of experimentation. ClickTime captures this data at point of entry—tying labor hours to pre-defined QRE categories with approval workflows and a full audit trail—so documentation is built into your team's daily workflow rather than reconstructed at tax time.

ClickTime AI maps activity from the tools developers already use—project management platforms, calendars, Google and Microsoft productivity apps, and meeting software like Zoom—into the project and cost codes that finance needs for R&D documentation. Developers don't need to change how they work or manually categorize hours. The result is complete, verified R&D labor data without the friction that leads to inaccurate records.