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Tax benefits that support inclusive employers

Tax Credits for Inclusive Employers

(Updated January 2020)

There are numerous benefits to being (or becoming!) an inclusive employer and actively seeking out a diverse workforce. It can give your business a different perspective on how to innovate and solve problems. A team that includes people with disabilities provides a wide breadth of experience to draw from. It creates an efficient and effective group of workers that treats everyone as equals. It can provide very real, very measurable benefits to productivity and profitability (here are some examples.)

The fact is: a diverse workforce — along with treating people as equals and with positivity — just makes good business sense.

On top of the natural benefits of hiring persons with disabilities, there are programs in place designed specifically to provide additional financial support to inclusive employers. Here's a quick guide to tax benefits for inclusive employers to get you started on the journey!

Work Opportunity Tax Credit

One example is the Work Opportunity Tax Credit. The IRS states that this is intended to provide employers with a credit for hiring qualified individuals. These individuals must belong to certain groups (as defined by the IRS) who have faced consistent barriers to finding employment; these groups may include persons with disabilities as well as veterans.

The amount of the credit depends on several factors, depending on the employee hired and the length of their employment, and can range from $1,200 to $9,600, according to the IRS.

Finding information on the Work Opportunity Tax Credit

The Internal Revenue Service provides detailed information on their official website regarding tax benefits for businesses who have employees with disabilities, in addition to a dedicated resource specifically for the Work Opportunity credit.

Eligible employers must obtain certification that the employee meets the required criteria before the credit can be claimed, and Form 8850 must be filed.

Disabled Access Credit

This is a non-refundable credit for small businesses who generate expenses in the process of making the workplace more accessible to persons with disabilities. Employers must also meet certain other criteria to be eligible for this credit. However, once the criteria is met, this credit can be taken each and every year an expense is generated for this purpose, states the IRS.

For inclusive employers, providing reasonable accommodations for employees is vitally important. Not only is it the right thing to do, it helps employees with disabilities not only to perform the duties of their position, but to thrive and reach their full potential. For more information on reasonable accommodations and workplace accessibility, click one of the categories here to learn more.

Finding information on the Disabled Access Credit

The IRS provides Form 8826; this form includes information on eligible expenses.

Barrier Removal Tax Deduction

The full name of this benefit is the Architectural Barrier Removal Tax Deduction, and provides a clue into what this benefit addresses: architectural and transportation related barriers that affect the mobility of persons with disabilities. This benefit, according to the IRS, allows for a deduction of up to $15,000 per year for qualified expenses that must normally be capitalized.

Finding information on the Architectural Barrier Removal Tax Deduction

This page on the IRS website provides additional detail on the Barrier Removal tax deduction, including how it is claimed and whether it can be used together with other deductions (hint: it is possible, if expenses meet the requirements and all other requirements are met).

Also, here's some specific examples of how workplaces are becoming more mobility inclusive, and how they are building accommodations for mobility-related disabilities.

An opportunity for employers to support diversity

If your company currently employs persons with disabilities or is looking for applicants to bring strength to your workforce, here’s some helpful links to get you started on the opportunities that may become available to you.

We also recommend that you consult a business tax professional or the IRS to determine your eligibility for any of these benefits, and how to claim them.