As business get more and more competitive, owners are making improvements to their product and premises. As these improvements are made, did you know that some of them may be eligible for a tax credit? The Disabled Access Credit is one way to save tax dollars by making improvements to your business. Listen in and learn more here or read our podcast script below!

What exactly is this credit?

The disabled tax credit works just like it sounds, if improvements are made to make it easier for a disabled customer to patronize your business or makes it easier for a disabled employee to do his/her job, you may be eligible for a tax credit – not a deduction, so it’s actually worth more.

What expenses are eligible for the credit?

The IRS basically says that eligible expenses include amounts paid to

  1. Remove barriers that prevent a business from being accessible to or usable by a person with disabilities. Ramps and bathroom remodels are great examples.
  2. To provide qualified interpreters or other methods of making audio materials available for those with language barriers.
  3. To provide methods to assist with those that are visually impaired.
  4. To acquire or modify equipment or devices for individuals with disabilities. For example, desks made for wheelchairs and a medical examination table designed for people with disabilities. You should talk to your vendor to see if the equipment qualifies for this type of credit. If you don’t ask, you don’t know. If your tax preparer isn’t aware of what you’ve done, you may miss a credit that you’re fully eligible to get.
  5. The expense must be reasonable and necessary to accomplish the items we just mentioned.

Can you get the credit later on, or is it only the year you’ve made those improvements?

It’s only the year you’ve made the improvements, but you can always file an amended return if you find out later that the credit was not taken.

Who is considered to be disabled?

Individuals with either physical or mental impairments. It’s not just the physical side of it. There must be a record of such impairment and being regarded as having such an impairment.

What businesses are eligible for credit?

It’s mostly going to be your small businesses. Small businesses are really defined as businesses with gross receipts under $1,000,000 and less than 30 full-time employees. Large employers will probably not benefit from this. This was really designed to help small businesses have an advantage.

How is the credit calculated?

It’s up to 50% credit on the first $10,000 of expense. That’s about $5,000 you can take as a credit for doing that improvement.

If a business cannot use it all in one year, can it be used in the future?

Yes. If some businesses get the maximum $5,000 tax credit and they don’t have that much tax, they can certainly carry that forward into the future.

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Jeff Dvorachek
I joined Hawkins Ash CPAs in 1998. I am the partner-in-charge of the Manitowoc, WI, office and tax director for the firm. I have thorough experience providing tax services to individuals, commercial businesses, nonprofit entities and estates and trusts. I also provide compilation and review services. I lead the Tax Committee and am a member of the Information Technology Advisory Committee.

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