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R&D Tax Credit for FinTech / InsurTech

Risk engines, underwriting & fraud models, trading systems; payment rails, compliance & security automation.

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How the R&D credit applies to FinTech / InsurTech

FinTech and InsurTech firms qualify primarily through software and quantitative modeling: risk and underwriting engines, fraud-detection models, trading systems, and payment infrastructure, plus compliance and security automation.

The qualifying uncertainty typically sits in model performance, latency, and security under real-world conditions.

Work that often qualifies in FinTech / InsurTech

Typical qualifying roles

Software Engineer Quantitative Analyst Data Scientist ML Engineer Security Engineer Platform Engineer Engineering Manager

Wages for time these roles spend on qualified research may count toward your credit.

Example credit scenario

Illustrative first-year ASC calculation

Qualified W-2 wages$600,000
Supplies$5,000
Cloud & computer rental$35,000
Contractor research spend$80,000
↳ 65% statutory haircut (IRC §41(b)(3))$52,000
Total QRE$692,000
Illustrative first-year ASC credit (6%) ≈ $41,520

Illustrative example using sample figures. Your actual credit depends on your facts; see Form 6765 and consult a tax professional.

The four-part test — applied to FinTech / InsurTech

The IRS requires qualifying research to satisfy four tests. Here's how each typically maps in this industry:

Permitted purpose

The activity aims at improving fraud-detection accuracy.

Technological in nature

The work relies on computer science and statistics.

Elimination of uncertainty

Unknown whether a model will reduce false positives at scale.

Process of experimentation

Teams use model training, backtesting, and controlled rollout.

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