Many business owners and employers are not aware of tax incentives that assist with Americans with Disabilities Act compliance. Three federal tax incentives are described below. States may offer more incentives.
Disabled Access Credit
Small businesses with 30 or fewer employees, or less than $1,000,000 in gross receipts from the previous year, may take an annual tax credit for making their businesses accessible to people with disabilities. A maximum annual benefit of $5,000 is available. A 50 percent of expenditures over $250, not to exceed $10,250, may be claimed on IRS Form 8826.
Though the Disabled Access Credit cannot be used for new construction costs, the annual tax credit can be used for expenses such as:
- Job coaches to provide support to employees with disabilities
- Printed materials in alternate formats (e.g.,Braille, audio, large print)
- Readers for employees/ customers who are blind or low vision
- Sign language interpreters for employees/customers
Work Opportunity Tax Credit
Work Opportunity Tax Credit (WOTC) provides a tax credit to employers hiring:
- Former felons
- SSI, TANF or food stamp recipients
- Summer youth employees
- Vocational rehabilitation referrals
Employers may receive a maximum tax credit of up to 40 percent of the first $6,000 in first year wages per qualifying employee ($2,400) who works at least 400 hours during the tax year. The maximum tax credit for qualified summer youth employees is 40 percent of the first $3,000 of first year wages ($1,200).
Employers may receive a 25 percent tax credit for employees who worked at least 120 hours but less than 400 hours. No credit is available for employees who worked less than 120 hours during the tax year.
Employers determine likely eligibility based upon information provided by employees. The employer must submit completed IRS Form 8850, Pre-Screening Notice and Certification Request, to their State Employment Security Agency (SESA) within 21 days after the employee beings work. The form must be signed by the employer and employee.
After reviewing Form 8850, SESA notifies employers in writing whether employees are indeed eligible for WOTC. Employers may then claim the tax credit for qualified employees. All businesses are strongly encouraged to consult with their tax advisors and to take advantage of these favorable tax write-offs.
Architectural/Transportation Tax Deduction
Any size business may take an annual deduction of up to $15,000 for expenses incurred to remove structural and transportation barriers for people with disabilities. Architectural /Transportation Tax Deduction may not be used for new construction or facility renovation. IRS Publications 907 and 535 provide instructions on claiming:
- Accessible building entrances
- Accessible parking spaces, ramps, curb cuts
- Wheelchair accessible fountains and restrooms
- Widening walkways to at least 48 inches wide