As a small business owner in the United States, taxes are probably one of your biggest business expenses. Failure to pay them, paying them late, or paying less than you should put you at risk for fines or criminal prosecution. The good news for small business owners is that the ADA Tax Credit allows you to pay less and get away with it.
But as you might have guessed, there is a caveat – your business must be ADA-compliant. That simply means that it must be accessible to people with disabilities. In this article, you’ll learn about the ADA tax credit, how it works, and how much you can claim as tax relief. But first…
🔍 Run a free ADA website audit and find out if you are ADA-compliant!
What is the ADA Tax Credit?
The ADA (Americans with Disabilities Act) requires businesses and organizations to remove all barriers to people with disabilities in places of public accommodation. However, complying with ADA requirements and becoming fully accessible can be an expensive investment, especially for small businesses.
The ADA tax credit is a tax relief scheme by the US Internal Revenue Service (IRS) designed to help eligible small business owners offset such accessibility-related costs. To be qualified to claim the ADA tax credit, you must spend money on eligible access expenses.
These include costs incurred:
- Removing barriers that prevent people with disabilities from accessing or using your business’ assets.
- Employing qualified interpreters or other means of making audio resources accessible to people with hearing impairments.
- Providing qualified readers, taped texts, and other means of making visual resources available to people with visual impairments;
- Buying or modifying equipment or devices to make them accessible to your people with disabilities.
Eligible access expenses also include additions or modifications to help employees do their jobs properly. These include not only physical accessibility features such as wheelchair ramps, braille signage, and accessible restrooms but also digital accessibility features.
Pro Tip: You cannot claim the tax credit for providing accessibility accommodations that do not cost you money.
ADA Tax Credit and Digital Accessibility
The ADA became law two decades before the birth of modern technology. However, several court rulings lend credence to the fact that it applies to the evolving digital space as well. Therefore, small business owners who invest in making their websites and web applications accessible may well be eligible to claim the disability tax credit IRS offers.
Several accessibility practices or implementations qualify as eligible access expenses, but some are more significant. These include accessibility adjustments to improve the website’s structure and navigation, provide live chat support, and paid services for file and media remediation.
Who is Eligible to Claim the ADA Tax Credit?
As mentioned earlier, only ADA-compliant small businesses can claim the ADA tax credit or disability credit access. In addition, the IRS stipulates the following eligibility rules:
In the preceding tax year, you must have had gross receipts of $1 million or less OR had 30 or fewer full-time employees.
- The business owner (you) must elect to claim the disabled access credit for the tax year.
How to Calculate Your Claim
The ADA tax credit is directly deducted from the taxes you owe the government. If eligible, you can claim up to $5,000 to compensate for the amount you paid to make your business accessible.
But first, there are a few things you must know before proceeding to learn how to calculate your disability credit:
- You cannot claim a tax credit on the first $250 you spent on accessibility-related costs.
- Your eligible access expenses must not exceed $10,250 for a taxable year.
- The maximum amount of tax credit you can claim is $5,000.
Now that we’ve got that out of the way, let’s see how to calculate your ADA tax credit:
- Add the total amount you spent making your website accessible.
- Subtract $250 from the sum.
- Divide the amount by two to get the total ADA tax credit you can claim.
You paid an annual fee of $479 for an Equally AI ADA website compliance audit. You also spent an extra $521 dollars on making your electronic documents (PDF, Excel & Word) and multimedia content accessible. In a year, your total accessibility expenses amount to $1,000.
Total Eligible Expenses: $479 + $521 = $1,000
Subtract $250: $1,000 – $250 = $750
Divide by two: $750/2 = $375
In essence, $375 is the total amount you can claim as ADA tax credit for the year.
Here is the most affordable accessibility pricing to make your website ADA-compliant.
How to Apply For ADA Tax Credit
Once you have confirmed that your business is eligible to claim the disability access credit, fill out form 8826 on the IRS website to begin your application. Afterward, you attach it to your yearly tax return and send them to the tax office together. Always consult a tax professional when in doubt – this will save you a lot of time and trouble!
Get started with our free ADA website audit tool to check your website’s accessibility status today!