June 29, 2021
This year, the IRS granted business owners with an extended deadline for federal income tax filing for the 2020 tax year from April 15th, 2021, to May 17th, 2021. Citing the unusual circumstances related to the pandemic, this extended deadline had business owners considering their options to save on their tax bill. As the competition rises in the world of business, business owners seek to improve their products, services, and digital assets to stand out while saving money come tax season.
In addition to finding ways to stand out online, business owners have started to discover that it’s also their responsibility to make their workplace and digital assets more accessible to employees and customers with disabilities. As the number of website-related accessibility lawsuits rise year over year, more businesses are scrambling to upgrade their websites and web content in order to gain sufficient legal protection. However, for small businesses in particular, another conundrum can be much more challenging:
How are they able to afford to solve all of their accessibility issues?
Many small businesses find the cost of online accessibility updates a barrier in and of itself, stopping them from offering important accessible features and getting vital legal protection. It’s no surprise that some business owners feel overwhelmed because of the impending danger of lawsuits and the high cost of accessibility.
The words “tax payment” and “good news” don’t necessarily go hand in hand. But all is not lost — there is good news. Did you know that a small business that meets specific criteria might get a tax credit for investing in website accessibility? The below tax credit allows you to save money by making these accessibility improvements to your business.
What Exactly Is This Credit?
Suppose you invest in making enhancements to make your business website accessible for all users to patronize your business or make it simpler for an employee with a disability to conduct their job; in that case, you may be entitled to this tax credit.
Tax credits aren’t the same as tax deductions. A deduction lowers taxable income and, as a result, the amount of tax owed. Tax credits are applied later in the process after the tax has been calculated — the credit is deducted from the tax owed. A tax credit is always preferred to a tax deduction since a credit reduces income tax on a dollar-for-dollar basis. Still, a tax deduction reduces income tax in proportion to your tax bracket.
What Is the Credit Called?
This credit is called the Disabled Access Credit. Use IRS Form 8826, the Disabled Access Credit, and reference Title 26, Internal Revenue Code, Section 44 to claim these tax benefits. This credit is underneath the general business credit section of your tax filings.
This tax credit is only available to for-profit businesses in the United States that meet one or both of the following criteria:
- Gross receipts of $1 million or less.
- No more than 30 full-time employees for the previous year. The IRS defines a full-time employee as someone who works at least 30 hours per week for 20 or more calendar weeks during the tax year.
By utilizing the Disabled Access Credit, small businesses can significantly lower their total cost of investments into web accessibility.
What Expenses Are Eligible for the Disabled Access Credit?
According to the IRS, eligible access expenses include:
- Removing impediments to accessibility for people with disabilities.
- Providing skilled interpreters or audio materials to individuals who are deaf or hard of hearing.
- Providing assistive screen reading technology, taped texts, and other options for individuals with visual impairments or blindness to access visual resources.
- Obtaining or modifying equipment or devices for those who have a disability
What Is the Credit Amount?
Businesses that meet these criteria will be overjoyed to hear that the Disabled Access Credit is only one page to fill out. The terms for claiming the Disabled Access Credit are simple: you can get a 50% credit on up to $10,250 for accessibility-related purchases over $250, with a maximum credit of $5,000. The credit is repeatable year-over-year.
So, in summary: you are eligible to receive 50% of your website accessibility investments back, year over year, in tax credits for up to $10,250 in expenses for a maximum credit given of $5,000.
Is There More?
The Disabled Access Credit is a federal tax credit. Additional tax benefits may be available at the state level. Depending on the state where your business is located, you should contact a tax consultant or conduct additional research.
There is an additional tax deduction for architectural enhancements. This deduction is only applicable to physical business locations, not websites.
Viscardi and Nebula Media Group Are Here to Help
Using this newfound knowledge, small business owners now have the opportunity to make these improvements to their website and content accessibility while receiving 50% of their investment back in tax credits. The Viscardi Center and Nebula Media Group have partnered to offer customized website accessibility solutions to businesses that fall under this tax credit criteria. Set up a free consultation with the team today and see how we can help make accessibility accessible to you.
An Important Disclaimer: Before making these purchases, it’s a good idea to speak with a tax specialist and plan appropriately. We are not responsible for any tax information that changes or is misinterpreted. This post is meant to be informative and does not replace the advice of an accountant or tax professional.
Founder and CEO, Nebula Media Group
Will oversees his agency that provides customized website and content accessibility solutions to small and mid-size businesses, helping them attain and then maintain accessibility compliance.