The Tax Credit for Small Businesses that Address their Web Accessibility — Do You Qualify?

12/11/2020

By Lily Clark

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12/11/2020

By Lily Clark

***Please note: We are not tax experts and this does not constitute legal advice in any way. To confirm your eligibility, we recommend you contact your tax advisor. 

As the number of ADA accessibility lawsuits continues to rise, more and more companies are racing to update their websites and web content in order to get proper legal protection. For smaller businesses in particular, however, another dilemma can prove even more problematic:

How are you supposed to afford to fix all of the accessibility issues in the first place?

The price tag associated with web accessibility updates is a barrier in and of itself to many small businesses, preventing them from providing essential accessibility options and obtaining valuable legal protection. Attempting to force or find space within a budget can be tricky though, not to mention stressful — and sometimes impossible.

With the looming threat of litigation and a hefty accessibility price tag providing a sturdy barrier, it’s no wonder that some businesses feel overwhelmed and trapped. Luckily, there’s a way to tackle both issues at once.

The IRS offers a tax incentive called the Disabled Access Credit to eligible small businesses that make necessary accessibility modifications to support people with disabilities. Even better, it applies to both physical and digital spaces — meaning that any accessibility updates a small business makes to its website would likely qualify.

What business would refuse an opportunity to save some money?

If you’re a small business that has spent money in the past year on updating your website’s accessibility, you could qualify for the Disabled Access Credit.

And if you’re a company that’s been wanting to address accessibility issues — or know that you need to — this information might be just the push you need to jump right in.

What is the Disabled Access Credit, and Who Qualifies for it?

The Disabled Access Credit is an IRS tax credit that can be claimed annually by eligible companies. The purpose of the credit is to help small businesses pay for their accessibility modifications in order to become more compliant with the Americans with Disabilities Act (ADA).

According to the IRS, “any business that for the previous tax year had either revenues of $1 million or less OR 30 or fewer full-time workers may take advantage of this credit.”

It is important to note that this is a tax credit, not a tax deduction, meaning that the IRS will reimburse a company for associated expenses from that year. For more information on the differences between credits and deductions, the ADA offers a Tax Incentive & Compliance Fact Sheet. For information about different ADA tax incentives in general, view the ADA’s Quick Tips.

What Expenses are Covered?

Most work done to improve upon a company’s existing accessibility will be covered by the credit, as long as the company meets the eligibility requirements listed above. It’s very important to note that the tax credit can only be used for modifications to a business’s accessibility, not for new construction overall.

Specifically, the following expenses are covered by the Disabled Access Credit:

  • The removal of barriers that prevent a business from being accessible to or usable by individuals with disabilities
  • Providing qualified interpreters or other methods of making audio materials available to hearing-impaired individuals
  • Providing qualified readers, taped texts, and other methods of making visual materials available to individuals with visual impairments, or
  • Acquiring or modifying equipment or devices for individuals with disabilities.

Websites that aren’t accessible can limit the options available to users with disabilities, sometimes preventing them from completing a transaction or accessing the website completely. Addressing a website’s accessibility involves finding and then remediating any issues within the code of the website itself, resulting in a barrier-free experience for all users.

A truly accessible website will also provide alternative methods of interaction or materials for users with different impairments. With the distinct results and support that it provides, digital accessibility modifications clearly qualify as a covered expense.

How Do I Calculate and Claim My Credit?

The Disabled Access Credit comes with certain parameters to keep in mind: a business can only claim 50% of its accessibility expenses for the credit, businesses have to spend a minimum of $250 for the credit to go into effect, and all potential credit is capped at $5,000 maximum.

In order to calculate the credit, simply subtract $250 from your business’s total spending, and then divide that amount by 2.

Here’s a more in-depth example:

  1. Calculate your total annual amount spent on accessibility modifications.
    • Ex: $7,500
  2. Subtract the minimum amount required ($250) from the total.
    • Ex: $7,500 – $250 = $7,250
  3. Divide your total from Step 2 in half.
    • Ex: $7,250 / 2 = $3,625
  4. You’ve got your total claim amount!
    • Ex: $3,625

If you spent over $10,250 in accessibility updates in the last year, keep in mind that the tax credit caps at $5,000. Since the Disabled Access Credit is an annual credit, businesses may claim it each year as long as they continue to meet the eligibility requirements.

To claim the credit, businesses need to fill out the IRS Form 8826. All businesses should confirm their eligibility with their tax advisor before claiming.

How Can I Make My Website Accessible?

If you’re a small business, the threat of litigation can be especially scary — expensive lawsuits can be more than enough to force a business into bankruptcy. Even further, it is essential that web users with disabilities have access to the same digital spaces and content as users without disabilities. The Disabled Access Credit will allow small businesses to provide the necessary support to all users and help create a more inclusive world.

The best way to make your website accessible is to go through full, manual remediation and receive an official accessibility certification. While the price may vary, the Disabled Access Credit will significantly reduce your total cost — and with certification being the only solution that offers 100% ADA compliance by conforming to the internationally accepted Web Content Accessibility Guidelines (WCAG), there’s no better answer to search for.

Online ADA will help your company through the certification process. Our process includes manual auditing done by human auditors, and will make your website comply with the ADA to the highest degree possible — a result that only certification can guarantee. At the end of the year, your company will then be able to claim the remediation work done on your website as part of the Disabled Access Credit, and the IRS will reimburse you for your accessibility costs.

After claiming the tax credit from your certification process, the total cost will be nothing compared to the compliance and litigation protection you’ll receive from addressing your accessibility!

Why trust Online ADA’s certification process?

  • We’re members of the W3C, the organization that wrote the go-to accessibility standards across the globe: the Web Content Accessibility Guidelines (WCAG).
  • We’re also members of the International Association of Accessibility Professionals (IAAP).
  • We’re a global leader in digital accessibility, and have years of experience working with companies large and small — all while supporting digital accessibility and advocating for equal access and inclusion for all users.
  • We not only identify accessibility issues for other companies — we also cheer on, support, and teach affiliated companies about digital accessibility standards and strategies, too.

Learn more about Online ADA’s certification process or contact us to discuss your accessibility needs and options today.

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The Author

Lily Clark

Lily Clark