Many small businesses complain when confronted with the expense of complying with the Americans with Disabilities Act. Most do not realize that there are a number of tax incentives available to offset the costs. Importantly, one tax incentive comes in the form of a tax credit, which is far more valuable than a tax deduction when it comes to creating tax savings.
Disable Access Tax Credit
If you make your small business accessible to persons with disabilities, you can take an annual tax credit. Your business is eligible if you earned one million or less the previous year or had 30 or fewer employees. If you meet this test, you can claim a tax credit of 50 percent of your expenditures to a maximum of $5,000. Since this is a tax credit, it is deducted from your total tax liability.
To claim this tax credit your expenditures must be paid or incurred to enable your business to comply with the Americans with Disabilities Act. Expenditures might include:
1. Purchase of adaptive equipment or modification of equipment;
2. Production of print materials in alternate formats such as Braille or audio; and
3. Sign language interpreters for employees or customers.
Modifications to buildings or offices also qualify as long as two criteria are met. First, the modifications cannot be construction of something new. Second, the building must have been in service prior to November 5, 1990.
Barrier Removal Tax Deduction
All businesses can take a tax deduction for expenditures incurred to remove physical, structural or transportation barriers for disabled individuals in the work place. This tax deduction carries no restrictions in regard to revenues earned or number of employees. Businesses may claim up to $15,000 a year as a tax deduction. Expenditure amounts exceeding this amount may also be claimed, but are subject to depreciation calculations.
To claim the barrier removal tax deduction, your expenditures must be related to making a facility or vehicle accessible to disabled persons. Examples include:
1. Providing ramps and curb cuts;
2. Making restrooms accessible to persons in wheelchairs; and
3. Expanding the width of sidewalks to at least 48 inches.
Significant Tax Break
Small business owners can double their tax saving pleasure by claiming both of these tax incentives in the same tax year. If a small business spent $20,000 creating wheelchair access to an office, it could take a $5,000 tax credit and a $15,000 tax deduction.
These tax incentives are in place to significantly reduce the burden of complying with the Americans with Disabilities Act. If you failed to claim the credit or deduction during the last three tax filing years, you should file amended tax returns to get a refund.
New Law Alters Highway Use Tax Regulations: Installment Payment Option Removed
The IRS has announced significant changes to the federal highway use tax regulations, impacting truckers and owners of heavy highway vehicles. As part of the American Jobs Creation Act of 2004, the option to pay the highway use tax in installments has been eliminated. This change affects filers of Form 2290, Heavy Highway Vehicle Use Tax Return, starting from the tax year beginning July 1, 2005, and ending June 30, 2006.
IRS Approves 2006 Toyota Highlander Hybrid for Clean Fuel Deduction
The IRS has officially recognized the 2006 Toyota Highlander Hybrid as eligible for the clean-burning fuel deduction. This means that taxpayers who purchase this hybrid vehicle new in 2005 can claim a tax deduction of up to $2,000 on their Form 1040.
Gambling Income and Expenses - Taxes
Gambling income encompasses a wide range of winnings, including lotteries, raffles, horse and dog races, and casinos. This income also includes the fair market value of non-cash prizes such as cars, houses, and trips. Understanding the tax implications of gambling winnings and losses is crucial for accurate reporting and compliance with IRS regulations.
