What are the benefits of having a fully compliant website with the WCAG & ADA guidelines?
Apart from avoiding any accessibility-related lawsuits, you can also receive an IRS tax credits deduction. In order to receive tax credits from the government, website owners must be compliant with website accessibility guidelines.
If you are part of a small business that already has made such expenditures, you can retrieve some of those costs. If you are not currently ADA compliant, these tax benefits might be what you need to get started on your accessibility journey.
What is Web Accessibility?
People with disabilities have the right to full and equal participation in all walks of life. The Equal Rights Act for People with Disabilities and Accessibility Regulations are designed to ensure that they can exercise this right.
The Accessibility Regulations deal with the removal of barriers so that people with disabilities can receive the same level of comfort and quality as the general public.
Accessible accommodations allow people with different disabilities such as the blind and visually impaired, people with physical disabilities who have difficulty operating their hands, people with cognitive disabilities such as dyslexia and ADHD, people with hearing impairments, and others with disabilities, to make effective use of the services and information offered on the site.
Being ADA compliant is a key factor for website owners who want to make sure they are eligible for tax deductions.
Details for Tax Credit
The Disabled Access Credit is limited to small businesses with gross receipts (including that of any predecessor) for the preceding tax year that did not exceed $1 million or had no more than 30 full-time employees during the preceding tax year.
For purposes of the definition:
• Gross receipts are reduced by returns and allowances made during the tax year, • An employee is considered full time if employed at least 30 hours per week for 20 or more calendar weeks in the tax year, and
• All members of the same controlled group and all persons under common control generally are considered to be one person.
• To claim these tax benefits, fill the IRS Form 8826. To claim the disabled access credit for the tax year, refer to Title 26, Internal Revenue Code, and Section 44.
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.
This credit can cover 50% of the eligible access expenditures in a year up to $10,250 (maximum credit of $5000). The tax credit can be used to offset the cost of undertaking barrier removal and alterations to improve accessibility; providing accessible formats such as Braille, large print, and audiotape; making available a sign language interpreter or a reader for customers or employees, and for purchasing certain adaptive equipment. The tax deduction is available to all businesses with a maximum deduction of $15,000 per year. The tax deduction can be claimed for expenses incurred in barrier removal and alterations.
Let’s say, you spend $4,000 on an accessibility audit. Only expenditures in excess of $250 qualify, so subtract $250 from $4,000 to get $3,750. You can claim 50% of that amount as a tax credit. That means you can subtract $1875 from the tax owed on your next return.
In case, you spend $11,550 on accessibility monitoring. You have exceeded the limit of $10,250.
You can claim $10,000 of that. The 50% tax credit, then, comes out to $5,000.
Please note that the same expenditures cannot be misused, however, this is not a one-time credit. It can be used each year as long as the eligibility requirements are met.
For more information, please see:
- IRS Tax Credits and Deductions (Website)
- Fact Sheet, Tax Incentives for Improving Accessibility (PDF)
Please note that this post does not replace the advice of an accountant or a tax professional. EqualWeb is not responsible for any tax-related information that changes or is misinterpreted.