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Tax Benefits for Businesses With Disabled Workers

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By Ephrat Livni, Esq. on October 22, 2015 11:59 AM

Accommodating disability is not just the right thing to do -- it could earn you credit with the IRS. The tax authority has a few options for accommodations that may give you a break on business taxes.

Whether you incur expenses providing access or removing obstacles to accessibility, your business can qualify. But we are talking tax codes, so it's not super clear. Here are some basics.

Disabled Access Credit

This is a $250-$10,000 non-refundable credit for money spent on disabled access. This credit is only for small businesses that earned $1 million or less or had no more than 30 full time employees in the year previous to filing.

That said, a small business that qualifies may take this credit every year that it applies. So, if you are continually improving the office and making it more accessible to disabled workers, you may apply for a credit every year.

Barrier Removal Tax Deduction

This deduction applies to businesses of any size. It is designed to encourage the removal of architectural and transportation barriers for the disabled and elderly.

Businesses availing themselves of this credit may claim up to $15,000 a year for qualified expenses for items that would otherwise be capitalized. This deduction is claimed by listing it as a separate expense on your business income tax return.

The barrier removal credit can be used in conjunction with the Disabled Tax Credit if the expenses meet the requirements of both sections. When using both, the IRS explains, the deduction is equal to the difference between the total expenditures and the amount of credit claimed.

Work Opportunity Credit

This gives eligible employers tax credit for up to 40 percent of the first $6,000 of the first-year wages of a new employee in a targeted group. Disability is targeted for the purposes of this employee tax rule.

Note that the employee for whom you are seeking credit must be certified disabled by "the appropriate government agencies" in the words of the IRS. If you claim this credit, do ensure that your worker is indeed officially disabled.

Another important point -- this credit is not immediately available. Only once the employee has worked 120 hours or 90 days does the clock start. It seems then that if you pay your people the first $6,000 of the first-year wages in the first 90 days of work ($2000/month), the work opportunity credit may not work.

Talk to a Tax Attorney

Tax codes are tough to navigate and businesses need to be particularly vigilant. Don't wait until April to meet with a tax attorney -- or better yet someone certified in accounting and law. And don't miss out on credits for doing the right thing.

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