Employers: Do You Know About the Disabled Access Credit

There are many tax credits that business owners can take advantage of, and today we're talking about the Disabled Access Credit, which is specifically extended to business owners who employ people who have disabilities.

What is the Disabled Access Credit?

This is a non-refundable tax credit put forth with small businesses in mind. Small businesses that accrue expenses as a result of hiring and then providing access to people with disabilities can claim this credit.

Who can claim the Disabled Access Credit?

To be eligible for the Disabled Access Credit, you cannot have earned more than $1 million prior to the year for which you want to claim the credit. Likewise, the business is not allowed to have employed more than 30 full-time workers in the prior year.

To claim the 50% credit for eligible work-related expenditures, small-business owners can fill out Form 8826, Disabled Access Credit. Each eligible small business can claim a deduction worth up to $15,000 per year, which can be applied toward qualified expenses on items that must otherwise be capitalized.

Can you benefit from the Disabled Access Credit and the architectural tax deduction in the same year?

Yes, your business can apply for the Disabled Access Credit and the architectural tax deduction in the same year as long as your related expenses have met the requirements of both.

What are the maximum tax credit values for employees?

With the Disabled Access Credit, the maximum tax credit values are extended to employees who log at least 400 hours of service:

  • Qualified individuals can claim up to $2,400.

  • Qualified individuals can claim up to 40% of their first-year wages, capping at $6,000.

  • Qualified veterans can claim up to $9,600.

  • Qualified veterans can claim up to 40% of their first-year wages, capping at $24,000.

Employees who have not worked 400 hours but did log a minimum of 120 hours will be eligible to claim up to 25% of their first-year wages.

How to claim the Disabled Access Credit

Before you can claim this tax credit, you'll need to obtain certification that an individual is eligible for the credit in the first place. You can do this by submitting IRS Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit. Once the form has been filled out, submit it to your state's workforce agency within 28 days of the eligible individual officially working for you as an employee.

Do not submit Form 8850 to the IRS. Instead, reach out to your state's workforce agency with any questions or concerns about the form. You can claim this tax credit for every year you are eligible.

We know this can be confusing. Reach out to us to help you apply for this credit.

TaxArpita Joshi