Tax Benefits for Organizations that Accommodate Individuals with Disabilities

Businesses that are “good citizens” by accommodating individuals with disabilities may qualify for a number of tax credits and/or deductions. These include:

Work opportunity tax credit. By hiring qualified individuals from specific groups, including some with disabilities, employers may be eligible for the credit. Businesses use Form 8850, “Pre-Screening Notice and Certification Request for the Work Opportunity Credit,” to certify that an individual is a member of a targeted group. Form 5884, “Work Opportunity Credit” is used in conjunction with Form 3800, “General Business Credit,” to claim the credit.

Disabled access credit. Eligible small businesses can use this credit to subsidize some of their costs for providing access to individuals with disabilities. The credit can apply to 50% of some of these expenditures. For example, costs associated with acquiring or modifying equipment for individuals with disabilities.

An eligible small businesses is defined as one with up to $1 million in gross receipts for the previous tax year or no more than 30 full-time employees during the previous tax year. The maximum credit is $5,000 and is based on 50% of qualifying expenses that exceed $250 during a tax year. (Therefore, the maximum credit is reached once you incur $10,250 in expenses.)

Form 8826, “Disabled Access Credit,” is used to take advantage of the credit. If the credit comes from a pass-through entity, it is reported using Form 3800, “General Business Credit.”

Barrier removal tax deduction. People with disabilities, as well as the elderly, face challenges when it comes to mobility in the workplace. A business of any size may claim a deduction of up to $15,000 a year when qualified expenditures are made to remove certain architectural and transportation barriers to this mobility.

The Architectural and Transportation Barriers Compliance Board has issued guidelines and requirements regarding the eligibility of these costs under the Americans with Disabilities Act. Qualified expenditures include those for doors and doorways, floor surfaces and elevators.

Related expenses may also be deductible, so long as they meet the following three tests: (1) The removed barrier is a substantial impediment to access or use of a facility or public transportation vehicle by those with disabilities, (2) the removed barrier must have created an obstacle for at least one major group of people with a disability, such as those who are in wheelchairs, and (3) the barrier must be eliminated without creating a new obstacle that significantly impairs access to or use of the facility. The deduction is claimed by listing it as a separate expense on the income tax return for the year in which the expenses were paid or incurred.

Your accounting professional can help your business claim any tax benefits for which it may be eligible for accommodating individuals with disabilities.

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