Advice on filing General Business Credit Form 3800 for small business deductions

Thanks for the detailed response! That clears up a lot. So I need to fill out separate forms first before even starting Form 3800? I was trying to do it backward. For the R&D credit, does all software development count or only certain types? I'm working on a new product and spent about $45,000 on development last year. Also, do you know if there's a minimum business size to qualify? My revenue last year was around $180,000 but I'm a sole proprietor.

For R&D credits, not all software development automatically qualifies. The work needs to meet the four-part test: it must be technological in nature, involve elimination of uncertainty, use a process of experimentation, and be for a permitted purpose (like creating new products). Your $45,000 in development costs might qualify if they meet these criteria, but you'll need to document your process well. There's no minimum business size requirement for most business credits, including R&D. Being a sole proprietor with $180,000 in revenue doesn't disqualify you at all. You'll report everything on your personal return. Just be aware that certain credits might be limited based on your tax liability, but unused credits can often be carried forward.

How accurate is it with the R&D credit? I tried claiming that two years ago and got audited because I didn't have enough documentation. Does it help you figure out what actually qualifies or just do the calculations?

I'm skeptical about these tax tools. Did it actually help you fill out the forms or just give general advice? Form 3800 has all those different parts and I never know which sections apply to my situation.

For R&D credits specifically, it helped identify which activities and expenses actually qualified - it asked detailed questions about each project to determine if they met the IRS four-part test. It also created documentation templates for each qualifying project, which would have been super helpful if you'd been audited. It definitely went beyond general advice. It walked through each part of Form 3800 and explained which sections applied to our situation and why. It even highlighted which fields needed entries and which could be left blank based on our specific business structure and the credits we qualified for. It was like having a tax pro looking over your shoulder but way more affordable.

Wait, how does this actually work? Do they just call the IRS for you? I'm confused about how they get through when nobody else can.

Yeah right. Nobody gets through to the IRS these days. I've been trying for months about a similar issue. There's no way some service can magically connect you that quickly. Sounds like a scam to me.

They don't call the IRS for you - they basically navigate the IRS phone system and wait on hold for you. When they reach a real person, they call you and connect you directly with the agent. It's not magic, just clever technology that handles the hold times and menu navigations. I was skeptical too! I'd been trying to get through for weeks about my General Business Credit carryforward question. The difference is they apparently have technology that keeps redialing and navigating the phone menu until they get through. I got connected in 15 minutes when I'd been unable to reach anyone for days on my own. The IRS agent I spoke with was definitely real and helped me figure out my Form 3800 issue.

What counts as "proper documentation" for R&D? I keep all my receipts and invoices, but do I need something beyond that to show the experimental process?

Receipts and invoices are a good start, but they're not enough for R&D credits. The IRS wants to see evidence of your experimental process - essentially documentation that shows you were solving technical problems through trial and error. Ideally, you should keep project plans that outline the technical uncertainty you were trying to resolve, lab notes or development logs showing different approaches you tried, test results showing what worked and what didn't, and meeting notes discussing technical challenges. The key is demonstrating you didn't know the outcome in advance and used scientific principles to find a solution. These records should be created during the work, not after the fact when preparing your taxes.

The Employee Retention Credit (ERC) was generally available for wages paid before October 1, 2021. However, there was an exception for recovery startup businesses that could claim it through December 31, 2021. For 2023 tax returns, you can't claim new ERCs, but if you had previously unclaimed credits from eligible quarters in 2020-2021, you could still claim them by filing amended returns (Form 941-X) for those specific quarters. This wouldn't go on your current Form 3800 though - it's a separate process through payroll tax filings.