With tax season in full swing we wanted to share some valuable tax credit information with you that equates to real dollars for you and your clients.
The Disabled Access Tax Credit provides a great opportunity to reach out and connect with your clients while saving them up to $5,000 this tax season.
What is the Disabled Access Tax Credit?
To assist businesses with complying with the Americans with Disabilities Act (ADA) the IRS allows a tax credit for eligible businesses to help offset the cost of removing architectural and transportation barriers to help improve accessibility for the handicapped and elderly.
The IRS also allows a tax deduction to all businesses for expenses incurred when making those accessibility improvements.
Watch this short video to learn more about the Tax credit eligibility requirements.
What’s the difference between a tax credit and a tax deduction?
A tax credit is an amount of money that taxpayers are permitted to subtract, dollar for dollar, from the income taxes that they owe.
A tax deduction is a deduction that lowers a taxpayer’s tax liability by lowering their taxable income.
Tax credits are more favorable than tax deductions or exemptions because they actually reduce the tax due, not just the amount of taxable income.
How do I know if my business is eligible for the tax credit?
There are two basic requirements that determine whether or not a business is eligible for the tax credit.
An eligible small business is one that:
- Earned $1,000,000 or less in the taxable year.
- Had no more than 30 full-time employees in the taxable year.
Businesses that made over $1,000,000 are still eligible if they had 31 or more full-time employees in the taxable year.
How much is the tax credit?
The Disabled Access Tax Credit is worth 50% of the eligible access expenditures, up to a maximum of $10,250.
You can’t claim a credit for the first $250 in expenses, and the maximum tax credit you can claim is $5,000.
An eligible business may claim the tax credit each and every year they incur eligible access expenditures.
This tax credit is nonrefundable, which means you can potentially reduce the tax you owe to zero, but it can’t provide you with a tax refund.
What type of “eligible access expenditures” qualify for the tax credit?
Eligible access expenditures include, but aren’t limited to, the following:
- Removal of architectural and transportation barriers to improve accessibility.
- Providing accessible formats such as Braille, large print and audio tape.
- Threshold ramps.
- Door landings.
- Grab bars
- Detectable warning systems
- A sign language interpreter or a reader available for customers or employees.
- ADA compliant computer systems and other adaptive equipment.
Note that the tax credit cannot be used for the costs of new construction – it can be used only for adaptations to existing facilities that are required to comply with the ADA.
What is the tax deduction and who is eligible?
The Architectural Barrier Removal Tax Deduction is available to businesses of any size to encourage the removal of architectural and transportation barriers to improve accessibility for people with disabilities and the elderly.
Businesses may claim a deduction of up to $15,000 a year for qualified expenses for items that normally must be capitalized. Businesses claim the deduction by listing it as a separate expense on their income tax return.
Better yet, businesses may use this deduction and the Disabled Access Tax Credit together in the same year as long as the expenses meet the requirements of both sections. To use both, the deduction is equal to the difference between the total expenditures and the amount of credit claimed. (Source: irs.gov)
A few of the key takeaways include:
- You or your clients can claim the Disabled Access Tax Credit for up to $5,000 if you made any eligible access expenditures.
- A tax credit is an amount of money that taxpayers are permitted to subtract, dollar for dollar, from the income taxes that they owe.
- To be eligible a small business must have earned $1,000,000 or less in the taxable year and had no more than 30 full-time employees.
- A business that made more than $1,000,000 in the taxable year is still eligible if they had 31 or more full-time employees.
- An eligible business may claim the tax credit each and every year they incur eligible access expenditures.
- A tax deduction is also available to businesses of any size for up to $15,000.
- A tax deduction is a deduction that lowers a taxpayer’s tax liability by lowering their taxable income.
- Businesses may use the tax credit and tax deduction together in the same year.
For more information about our wide selection of ADA compliant products please visit our Products Page, or call us toll free at 800-497-2003.
SafePath Products is an American manufacturer of ADA compliant threshold ramps, shower ramps, entry level landings, seismic surface transitions, flooring reducers and other industrial and residential products for ADA access code compliance. For over 24 years we’ve been the industry leader in providing “green” solutions to the construction industry, and all of our products are made from 100% recycled rubber here in the USA.
Contact us today to find out how we can help you with your next project.