As a business owner, you need to be aware of The American Disability Act and its requirements specific to your operations. One important requirement is making your website accessible to all potential visitors. To be in compliance with these regulations you may need to engage additional accessibility techniques, automated tools, or other accessibility services to your website.
Depending on the level of accessibility software, auditing, and additional website design you need to do to get your website into ADA compliance, your investment may be significant. If you have ADA compliance expenditures related to a website or other elements of your business the good news is that you may qualify for the ADA Tax Credit for the tax year in which they were incurred.
Here are some answers to frequently asked questions about the ADA Tax Credit. Check them out to see if your business may qualify this tax year:
What is the maximum ADA Tax Credit? The credit covers 50% of the eligible access expenditures made during the previous tax year, with a maximum expenditure limit of $10,250, excluding the first $250 of the expenditures. The highest tax credit a business can receive is $5,000.
What are the eligibility requirements for the ADA Tax Credit? The ADA tax credit is available to businesses that generated $1,000,000 or less during the year prior to filing or businesses that employ 30 or fewer full-time employees.
What kind of website development fees and other accessibility-related expenditures qualify for the ADA Tax Credit? According to the IRS, the tax credit covers the following accessibility and ADA-related expenditures:
- web accessibility solutions or tools that optimize websites (see additional website expenses that qualify below).
- the hiring of sign language interpreters
- the purchase of adaptive equipment
- the production of accessible formatting on printed materials (braille, large print, audiotape, computer diskette)
- the removal of architectural barriers in facilities or vehicles
- fees for consulting services
One of the original intentions of the ADA was to ensure that the evolving digital environment was accessible to all people regardless of their ability level. You should be aware that ADA regulations and compliance requirements apply to websites. Therefore any improvements you make to your site to meet these requirements can qualify as expenses under the ADA tax credit. Examples of qualifying ADA website compliance expenses include:
- Homepage and other on-page adjustments
- Website page structure and site map alterations
- The addition of live chat support that makes a site more accessible.
- Updates to copy on your site and additional content such as videos or closed captioning.
- PDF file and other media remediation services required by ADA standards.
Can expenses that qualify for the ADA Tax Credit be carried over from year to year? No, they cannot. Although the ADA tax credit can be applied for and earned on an annual basis, expenditures may not be carried over from the previous year to claim a credit that exceeded the expenditure limit from the year before. However, if the credit amount you’re entitled to exceeds the amount of taxes that you owe, you are allowed to roll the unused portion of the credit forward into the next year.
How can businesses apply for the ADA Tax Credit? Once you have confirmed that your business is eligible, fill out Form 8826 to apply. You can then attach this form to your annual tax return and sent alongside it. Form 8826 is available on the IRS government website.
If you are not sure about how to claim the ADA Tax Credit or if your expenses qualify, be sure to reach out to our team for assistance.