Are you looking for tax credits to help your business accommodate customers with disabilities or the elderly? There are incentives for businesses that strive to comply with the American Disabilities Act (ADA).
Incentives can be used for a variety of purposes, although they can’t be used for new construction. The Disabled Access Credit helps small businesses receive a non-refundable credit to make improvements in accessibility.
And the good news is you can take this credit every year that you incur these expenses.
Here’s everything you need to know about IRS Form 8826 and the Disabled Access Credit.
Disabled Access Credits
Did your business earn $1 million or less or have fewer than 30 full-time employees last year? If so, you’re probably eligible for the Disabled Access Credit for each year you incur disability access expenditures.
According to the IRS, the definition of a full-time employee is someone who works 30 hours per week or 20 or more weeks of the year.
Small businesses that are eligible for the credit can take up to $5,000. That’s half of the eligible expenses of up to $10,250.
Why These Credits Matter
Businesses that make an effort to improve accommodations for disabled individuals are serving a vital role in their communities. They are often leaders who strive to make the world a more equal place for all.
Making improvements and accommodations can be expensive for small businesses. Fortunately, there are tax credits to help offset some of these expenses.
If you’re a business owner and want or need to improve accessibility standards, you may be able to take advantage of Disabled Access Credits.
Tax Credit for Barrier Removal (IRC-190)
Large and small businesses can take advantage of this deduction for barrier removal. It provides a business deduction of up to $15,000 each year.
This covers expenses incurred for removing barriers in buildings or vehicles to help improve accessibility for individuals with disabilities or the elderly.
Eligible expenses include:
- Barrier removal, widening doorways, and installing ramps
- Providing accessibility services such as sign language interpreters
- Providing print materials in various formats such as Braille or large print
- Acquiring or Modifying devices or equipment for disabled individuals
Your accommodation expenses must be necessary and reasonable. Tax credits will only apply to adapting your current business building. No tax credits are available for new construction.
Tax Incentive Combination
These two tax incentives can be used in combination by eligible businesses if the expenditures qualify under ICR Sections 44 and 190.
If your business expenditures exceed $10,250 for the $5,000 maximum tax credit, the deduction will equal the difference in the total amount spent and the credit claimed.
As a small business owner, you have a responsibility to make your business more accommodating for your employees, customers, and disabled individuals. Doing your part is much easier with federal tax credit incentives.
ADA Guidelines
The Americans With Disabilities Act (ADA) is in place to protect individuals with disabilities from discrimination in public places, including the workplace, businesses, and transportation.
To comply with ADA guidelines, small business owners must make changes to ensure their businesses are more accessible to disabled individuals and the elderly.
These improvements can be costly. The IRS provides disabled access credits or ADA tax credits to make these changes easier and less disruptive for small businesses.
You cannot claim a tax credit for any accommodation that doesn’t cost you money.
Individuals With Disabilities
The IRS defines an individual with a disability as someone who meets the following requirements:
- Has a mental or physical impairment that significantly limits one or more life activities
- Has a documented record of impairment
- Is regarded as having a physical or mental impairment
Disability Tax Credit Form
The Disabled Access Credit is part of the IRS’ general business tax credits. To claim the credit, businesses must use Form 8826.
The IRS prevents a double benefit. That means that the credit you enter on line 6 of the form, you cannot claim as another deduction in your taxable income or any other credit.
If your only source for the credit is from pass-through entities, filing Form 8826 isn’t necessary. You can report this credit on Form 3800, the General Business Credit.
Controlled groups of corporations or businesses are treated as single taxpayers in regard to this credit.
Consider hiring a tax professional to assist you with filing your taxes and applying for applicable tax credits for your business.
Some businesses don’t meet the IRS requirements for the Disabled Access Credit. If you’re not eligible for the tax credit, you may be able to take the deduction instead.
What’s the Difference?
Tax credits reduce a taxpayer’s tax bill. Deductions reduce a taxpayer’s tax liability.
A business that incurs eligible disability access expenses may be able to claim up to $15,000 per year. Any business that spends money to improve accessibility to their facilities or transportation vehicles may claim the deduction.
Understanding the Disabled Access Credit
As a small business owner, you have a responsibility to ensure accessibility for individuals with disabilities and the elderly.
More and more, small business owners are understanding the importance of these accommodations and taking advantage of the Disabled Access Credit and other incentives.
At ERC today, our goal is to ensure business owners receive the business tax credits they’re entitled to. We’ve had great success helping businesses, large and small get the tax benefits they deserve. And we’d love to help you!
Find out if your business may be eligible to receive a grant of up to $26,000 per employee! Contact ERC Today to learn more.
