There are three tax incentives available to employers that hire people with disabilities or make their places of business accessible for employees and customers with disabilities.
Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain target groups, including disabled persons, who have consistently faced significant barriers to employment. Refer to Form 8826, Disabled Access Credit, for information about eligible expenditures.
Disabled Access Credit
According to the IRS, the Disabled Access Credit provides a non-refundable credit for small businesses that incur expenditures for the purpose of providing access to persons with disabilities. An eligible small business is one that that earned $1 million or less or had no more than 30 full time employees in the previous year; they may take the credit each and every year they incur access expenditures. Refer to Form 8826, Disabled Access Credit (PDF), for information about eligible expenditures.
Architectural and Transportation Barrier Removal Deduction
According to JAN (Job Accommodation Network), businesses may choose to deduct up to $15,000 for making a facility or public transportation vehicle, owned or leased for use in the business, more accessible to and usable by individuals with disabilities. A facility is all or any part of a building, structure, equipment, road, walk, parking lot, or similar property. A public transportation vehicle is a vehicle such as a bus or railroad car that provides transportation service to the public or to customers.
The deduction may not be used for expenses incurred for new construction, for a complete renovation of a facility or public transportation vehicle, or for the normal replacement of depreciable property. In the case of a partnership, the $15,000 limit applies to the partnership and to each partner. Amounts in excess of the $15,000 maximum annual deduction can be added to the basis of the property subject to depreciation. In order for expenses to be deductible, accessibility standards established under Section 190 regulations of Title 26 of the Internal Revenue Code must be met.
Barrier Removal Tests
According to About.com, if you are not sure if the barrier meets the requirements for deductibility, consider these factors:
- Did the removed barrier substantially limit access or use of a facility or public transportation vehicle by persons who have a disability or are elderly.
- Was the removed barrier, a barrier for at least one major disability groups (such as deaf, blind, physically impaired) or are elderly?
- Was the removed barrier removed without creating any new barrier that significantly impairs access to or use of the facility or vehicle by a major group of persons who have a disability or are elderly.
For additional information on Section 190, contact your local IRS office, go to their website at http://www.irs.gov/businesses or phone them at (800)829-4933 (V) or (800)829-4059 (TTY).