Tax Incentives for Businesses

Tax Incentives for Businesses

There are tax incentives for hiring people with disabilities. These include the following: 1) the Work Opportunity Tax Credit (WOTC ), 2) the Small Business Tax Credit, IRS Code Section 44, Disabled Access Credit (DAC), and, 3) theArchitectural and Transportation Tax Deduction, IRS Code Section 190, Barrier Removal. Although there are three tax incentives, the WOTC holds the greatest significance, promise and benefit for employers seeking to hire mental health consumers.

1. The WOTC allows private sector businesses that hire certain individuals with disabilities to be eligible for a credit of up to $2400 per new adult hire if the individual is part of one or more targeted groups. This includes VOCATIONAL REHABILITATION customers and Supplemental Security Income (SSI) recipients. For employees who are also qualified veterans with disabilities, this credit is doubled.

In order to qualify and claim the credit, an employer must hire a WOTC-certified job candidate. The tax credit is up to 40% of the first $6000 in wages paid to each new hire for the first year of employment, with a maximum tax credit of up to $2400 per new hire.

Businesses must complete and submitthe Department of Labor's Employment and Training Administration (ETA ) form 906.

2. The Small Business Tax Credit allows businesses that earned $1 million or less in the past year or who had 30 or fewer full-time employees to take an annual tax credit of up to $5000 for a variety of accessibility expenditures.

Businesses can claim the Disabled Access Credit on IRS form 8826. The credit amount is subtracted from the total tax liability. For mental health consumers certain fees for "consulting services" may also be included under certain circumstances, but the target seems to be for expenses related to physical disabilities.

3. The Architectural / Transportation Tax Deduction allows businesses of all sizes to take an annual deduction of up to $15,000 for expenses related to a structure or vehicle so it can be used by someone with a disability.

Small businesses can use these incentives in combination with the DAC if the expenditures incurred qualify under both Section 44 and 190. The deduction is equal to the difference between the total expenditures and the amount of the credit claimed.

For further information please contact:

1. Office of Disability Employment Policy (ODEP), U.S. Department of Labor, 200 Constitution Ave., NW, Washington D.C. 20210, 1-866- ODEP-DOL (633-7365); and/or

2. Job Accommodation Network (JAN), P.O. Box 6080, Morgantown, West Virginia 26505-6080, 1-800-526-7234.askjan.org