Disabled Access Credit
Overview
The Disabled Access Credit is a non-refundable credit for small businesses that have expenses for providing access to people with disabilities.
Related IRC and IRS Publications and Forms
Form 8826 – Disabled Access Credit
Form 3800 – General Business Credit
When employers make their business accessible to employees and customers with disabilities, they may be eligible for the disabled access credit. The disabled access credit is only available to businesses that incur costs in order to comply with the Americans with Disabilities Act (ADA).
Eligible Small Business
For purposes of the credit, an eligible small business is any business or person that:
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Had gross receipts (including that of any predecessor) for the preceding tax year that did not exceed $1 million OR
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Had no more than 30 full-time employees during the preceding tax year.
For purposes of the definition:
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Gross receipts are reduced by returns and allowances made during the tax year,
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An employee is considered full time if employed at least 30 hours per week for 20 or more calendar weeks in the tax year, and
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All members of the same controlled group and all persons under common control generally are one person. (Sec 44(d)(2)
Eligible Access Expenditures
For purposes of the credit, these expenditures are amounts paid or incurred by the eligible small business to comply with applicable requirements under the Americans with Disabilities Act of 1990 (Public Law 101-336) as in effect on November 5, 1990. Eligible access expenditures include amounts paid or incurred:
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To remove barriers that prevent a business from being accessible to or usable by individuals with disabilities;
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To provide qualified interpreters or other methods of making audio materials available to hearing-impaired individuals;
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To provide qualified readers, taped texts, and other methods of making visual materials available to individuals with visual impairments; or
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To acquire or modify equipment or devices for individuals with disabilities.
The expenditures must be reasonable and necessary to accomplish the above purposes. Eligible expenditures do not include expenditures in 1 above that are paid or incurred in connection with any facility first placed in service after November 5, 1990.
Eligible access expenditures must meet those standards issued by the Secretary of the Treasury as agreed to by the Architectural and Transportation Barriers Compliance Board and set forth in regulations. See IRC Sec 44(c) for other details.
Disability for an individual means:
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A physical or mental impairment that substantially limits one or more major life activities,
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A record of such an impairment, or
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Being regarded as having such an impairment.
Credit
Is 50% of eligible expenses in excess of $250 but the credit is capped at a nonrefundable amount of $5,000.
No Double Dipping
To the extent of the credit, the eligible access expenditures may not be claimed as a deduction in figuring taxable income, capitalized, or used in figuring any other credit.
Form 8826
The credit is determined on Form 8826. Partnerships and S corporations, report this amount on Schedule K. All others, report this amount on Form 3800, Part III, line 1e.
Barrier Removal Tax Deduction
The architectural barrier removal tax deduction of IRC Sec 190 encourages businesses of any size to remove architectural and transportation barriers that helps people with disabilities and the elderly get around more easily. Businesses may claim a deduction of up to $15,000 a year for qualified expenses on items that normally must be capitalized. Businesses claim this deduction by listing it as a separate expense on their ncome tax return. The tax return must be timely filed. This deduction is not connected to ADA compliance and is available to any business taxpayer.
Businesses may use the Disabled Access Credit and the architectural tax deduction together in the same tax year if the expenses meet the requirements of both benefits. The amount of the credit is subtracted from the total expenditures and the remainder is available for the Sec 190 deduction.