Title
Work Matters
Tax Incentives/Credits
Overview
There are federal and state tax incentives/credits available to help businesses cover the cost of accommodations for employees with disabilities. There are tax incentives/credits available to make a business place accessible for employees and/or customers with disabilities. This fact sheet describes several tax credits/incentives and provides contact information for additional information. You are strongly encouraged to go to the specific agency website to verify and obtain the most current information as information can change.
Disabled Access Credit
Small Business Tax Credit: IRS Code Section 44, Disabled Access Credit
What is it?
Small businesses may take an annual tax credit for making their business
accessible to persons with disabilities.
Who is eligible?
A business that earned a maximum of $1 million in revenue the previous year or had 30 or fewer full-time employees.
What is the amount?
The credit is 50 percent of expenditures over $250, not to exceed $10,250, for a maximum benefit of $5,000. The credit amount is subtracted from the total tax liability after calculating taxes.
What expenses are covered?
The credit is available every year and can be used for a variety of costs such as:
□ Sign language interpreters.
□ Readers for employees or customers who have visual impairments.
□ The purchase of adaptive equipment or the modification of equipment.
□ The production of print materials in alternate formats.
□ The removal of architectural barriers in buildings or vehicles.
What expenses are not covered?
The tax credit does not apply to the costs of new construction. A building being modified must have been placed in service before November 5, 1990.
How can this credit be claimed?
Businesses can claim the Disabled Access Credit on IRS Form 8826.
Work Opportunity Tax Credit
Work Opportunity Tax Credit (WOTC)
What is it?
WOTC provides a tax credit for employers who hire certain targeted low-income groups, including vocational rehabilitation referrals, former AFDC recipients, veterans, ex-felons, food stamp recipients, summer youth employees and SSI recipients.
How does it apply to persons with disabilities?
Employers that hire individuals who receiving Supplemental Security Income (SSI) or are certified vocational rehabilitation (VR) referrals are eligible.
• What is the amount?
The credit is available to employers who qualified applicants based on the individual's hours worked and wages earned in the first year.
• If the individual works at least 120 hours, the employer may claim a tax credit equal to 25% of the individual's first year wages, up to the maximum tax credit.
• If the individual works at least 400 hours, the employer may claim a tax credit equal to 40% of the individual's first year wages, up to the maximum tax credit.
What are the effective dates?
This program is subject to yearly Congressional renewal.
What agency provides the WOTC certification?
In Maryland, it is the Department of Labor, Licensing and Regulation.
How do businesses file for this credit?
Complete and submit IRS Form 8850, “Pre-Screening Notice and Certification Request for the Work Opportunity and Welfare-to-Work Credits,” to DLLR.
For the most current information visit:
Small Business Tax Credit
What is it? Small businesses may take an annual tax credit for making their businesses accessible to persons with disabilities. The total disabled access tax credits taken in 1996 on corporate income tax returns by all industries totaled $11,865,000, according to the IRS.
What are the eligibility requirements? Small businesses that in the previous year earned $1 million or less in gross receipts or had 30 or fewer full-time employees are eligible for the Small Business Tax Credit.
What expenses are covered? The tax credit is available every year and can be used for a variety of costs such as:
o Sign language interpreters for employees/customers who have hearing impairments
o readers for employees/customers with visual impairments
o the purchase of adaptive equipment or the modification of equipment
o printed materials in alternate formats (e.g., Braille, audiotape, large print)
o the removal of architectural barriers in buildings or vehicles
o other similar services (i.e., use of a job coach or a co-worker to provide support to an employee with a disability).
What expenses are NOT covered? The tax credit does not apply to the costs of new construction, and a building being modified to accommodate the disabled must have been placed in service before November 6, 1990.
What is the amount of the tax credit? The credit is 50% of expenditures over $250 but not to exceed $10,250, for a maximum benefit of $5,000.
How can this credit be claimed? Businesses can claim the Disabled Access Credit on IRS Form 8826.
For more information on the Small Business, Disabled Access Credit contact the Internal Revenue Service at
Barrier Removal
Architectural/Transportation Tax Deduction: IRS Code Section 190,
What is it? Businesses may take an annual deduction for expenses incurred to remove physical, structural and transportation barriers for persons with disabilities.
What are the eligibility requirements? All businesses are eligible.
What expenses are covered? It can be used for a variety of costs to make a facility or public transportation vehicle owned or leased for use in the business more accessible to and usable by persons with disabilities. Examples of deductions include:
o providing accessible parking spaces, ramps, and curb cuts
o providing telephones, water fountains, and restrooms that are accessible to persons using wheelchairs
o making walkways at least 48 inches wide and providing accessible entrances to buildings including stairs and floors.
What expenses are NOT covered? The deduction may not be used for expenses incurred for new construction, completion of renovation to a facility or public transportation vehicle, or for normal replacement of depreciable property.
What is the amount of tax deduction? The Internal Revenue Service (IRS) allows a deduction of up to $15,000 per year for qualified architectural and transportation barrier removal expenses.
How can this expenditure be deducted? Businesses should follow the instructions found in IRS Publication 907 and in IRS Publication 535 entitled: Business Expenses. It is important to note that businesses may not take a deduction and a tax credit on the same expenditure.
For more information on the Architectural/Transportation Tax Deduction, IRS Section 190, contact the Internal Revenue Service at .
Maryland Disability Employment Tax Credit
Maryland Disability Employment Tax Credit (MDETC)
What is it?
This is a Maryland state tax credit that allows businesses to claim credit for
employees with disabilities they hire.
For each taxable year, for the wages paid to each qualified employee with a disability, a credit is allowed in an amount equal to 30% of up to the first $ 9,000 of the wages paid to the qualified employee with a disability during each of the first 2 years of employment.
Transportation/Childcare
For each taxable year, for child care provided or paid for by a business entity for the children of a qualified employee with a disability, or transportation expenses that are incurred by a business entity to enable a qualified employee with a disability to travel to and from work, a credit is allowed in an amount equal to up to $ 900 of the qualified child care or transportation expenses incurred for each qualified employee with a disability during each of the first 2 years of employment.
Who may qualify?
Individuals who have been certified by the Division of Rehabilitation Services (DORS) or the US Department of Veteran Affairs (VA) as having met the criteria for MDETC qualify.
How does a business file for this credit?
□ An individual with a disability may present a signed MDETC voucher to a potential employer.
□ Once the individual is hired, the business completes the appropriate portion of the voucher and returns it to DLLR within 30 days.
□ If the state determines the individual is qualified for the tax credit, a Certificate of Eligibility will be returned to the business.
□ The employer must retain the Certificate to document and justify including the tax credit on tax returns.
Where to go for more information:
Department of Labor, Licensing and Regulation (DLLR)
Tax Credit Program Administrator
1100 N. Eutaw Street Room 201
Baltimore Md. 21201
Telephone: 410-767-2093
Fax: 410-767-2078
Who may qualify?
Individuals who have been certified by the Division of Rehabilitation Services (DORS) or the US Department of Veteran Affairs (VA) as having met the criteria for MDETC qualify.
How does a business file for this credit?
□ An individual with a disability may present a signed MDETC voucher to a potential employer.
□ Once the individual is hired, the business completes the appropriate portion of the voucher and returns it to DLLR within 30 days.
□ If the state determines that individual is qualified for the tax credit, a Certificate of Eligibility will be returned to the business.
□ The employer must retain the Certificate to document and justify including the tax credit on tax returns.
Resources
Internal Revenue Service (IRS)
Office of Associate Counsel
Voice (202) 662-3110
Website:
Maryland Department of Labor, Licensing, and Regulation (DLLR)
Voice: (410) 767-2080 / (410) 767-2047
Website: dllr.state.md.us/employment/mdetc.htm
Maryland State Dept. of Education
Division of Rehabilitation Services (DORS)
Voice: (410) 554-9385/ (888) 554-0334
TTY: (410) 554-9411
Email: dors@dors.state.md.us
Website: dors.state.md.us
U.S. Department of Labor Employment & Training Administration
Voice: (866) 4 - USA - DOL
TTY: (877) 889 - 5627
Website:
U.S. Department of Labor
Office of Disability Employment Policy (ODEP)
Voice: (866) 633-7365
TTY: (877) 889-5627
Website: odep
Maryland Department of Disabilities
Voice / TTY: (410) 767-3660
Voice / TTY: (800) 637-4113
Email: mdod@
Website: mdod.
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