US Tax System Credit and Benefits Opportunities and Challenges For Persons With Disabilities and The

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US Tax System Credit and Benefits Opportunities
and Challenges For Persons With Disabilities and
Their Families

• 2008 Ticket Partners Summit Working Together for
  Success
• March 12, 2008
• Steve Mendelsohn, JD, Law, Health Policy and
  Disability Center, University of Iowa, College of
  Law.

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Disabled Access Credit

• Internal Revenue Code 44 Provides For A
  Nonrefundable Disabled Access Tax Credit For An
  Eligible Small Business That Incurs Eligible
  Access Expenditures That Provide Access To PWD.
• The Amount Of The Tax Credit Is Equal To 50 Of
  The Eligible Access Expenditures In A Year That
  Exceed 250 But Are Less Than 10,000. Thus The
  Maximum Amount Of Credit Is 5,000 Per Year.
• An Eligible Small Business May Take The Disabled
  Access Credit Each And Every Year It Makes
  Eligible Access Expenditures.

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Disabled Access Credit

• Definitions
• Eligible Small Business A Business With Either
• Gross Receipts Of 1 Million Or Less In The
  Preceding Tax Year, Or
• 30 Or Fewer Fulltime Employees During The
  Previous Tax Year
• Eligible Access Expenditures Amounts Paid Or
  Incurred By An Eligible Small Business To Comply
  With The Applicable Requirements Of The Americans
  With Disabilities ACT (ADA)

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Disabled Access Credit

• Eligible Access Expenditures
• Include Amounts Paid Or Incurred To
• Remove Architectural, Communication, Physical Or
  Transportation Barriers That Prevent A Business
  From Being Accessible To, Or Usable By,
  Individuals With Disabilities
• Provide Qualified Readers, Taped Texts Other
  Effective Methods Of Making Materials Accessible
  To People With Visual Impairments
• Provide Qualified Interpreters Or Other Effective
  Methods Of Making Orally Delivered Materials
  Available To Individuals With Visual Impairments
• Acquire Or Modify Equipment Or Devices For PWD
• Expenses In Conjunction With New Construction Are
  Not Eligible

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Architectural/Transportation Tax Deduction
Barrier Removal Costs

• Internal Revenue Code Section 190 Created A
  Special Tax Deduction To Encourage Individual And
  Corporate Employers To Remove Architectural And
  Transportational Barriers To The Mobility Of PWD
  And The Elderly
• All Businesses Are Eligible To Take A Tax
  Deduction Of Up To 15,000 A Year For Qualified
  Expenses Incurred To Remove Barriers For Persons
  With Disabilities Or The Elderly
• Amounts In Excess Of The 15,000 Maximum Annual
  Deduction May Be Depreciated

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Architectural/Transportation Tax Deduction
Barrier Removal Costs

• Deduction Is Allowed For The Costs Of Making A
  Facility Or Public Transportation Vehicle More
  Accessible To And Usable By PWD Or The Elderly.
• Facility Is All Or Any Part Of Buildings,
  Structures, Equipment, Roads, Walks, Parking Lots
  Or Similar Real Or Personal Property.
• Public Transportation Vehicle Is A Vehicle,
  Such As A Bus Or Railroad Car, That Provides
  Transportation Services To The Public (Including
  Services For Your Customers, Even If Not In The
  Business Of Providing Transportation Services.

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Architectural/Transportation Tax Deduction
Barrier Removal Costs

• What Expenses Are Covered?
• Barrier Removal Costs Must Meet The Guidelines
  And Requirements Issued By The Architectural And
  Transportation Barriers Compliance Board Under
  The Americans With Disabilities Act (ADA)
• Examples Of Deductible Costs
• Providing Accessible Parking Spaces, Ramps And
  Curb Cuts,
• Providing Telephone, Water Fountains, And
  Restrooms Which Are Accessible To Persons Using
  Wheelchairs,
• Making Walkways At Least 48 Inches Wide
• What Expenses Are Not Covered?
• Deduction Can Not Be Used For Expenses Incurred
  For New Construction, Or For A Complete
  Renovation Of A Facility Or Public Transportation
  Vehicle Or For The Normal Replacement Of
  Depreciable Property

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Architectural/Transportation Tax Deduction
Barrier Removal Costs

• The Architectural/Transportation Tax Deduction
  Under IRC Section 190 And The Disabled Access
  Credit Under IRC Section 44 Maybe Used Together
  In The Same Tax Year, If The Expenses Meet The
  Requirements Of Both Sections.
• If You Claim The Disabled Access Credit, You Must
  Reduce The Amount You May Deduct Under The
  Architectural Tax Deduction By The Amount Of The
  Credit Claimed.
• For Example, If A Business Spent 12,000 For
  Qualifying Access Adaptations, It Would Qualify
  For A 5,000 Disabled Access Credit And A 7,000
  Tax Deduction

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Work Opportunity Credit

• The Work Opportunity Credit Provides A Tax Credit
  For Employers Who Hire Individuals That Are
  Members Of Certain Targeted Low-income Groups.
• Targeted Low-income Groups Include
• Vocational Rehabilitation Referral
• Qualified Supplemental Security Income (SSI)
  Recipient
• Qualified Recipient of Assistance under Temporary
  Assistance for Needy Families (TANF) Veterans
• Qualified Food-stamp Recipients
• Qualified Summer Youth Employees

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Work Opportunity Credit

• An individual is not considered a qualified
  member of a targeted group unless the applicable
  state employment security agency certifies them
  as a member
• Certification requirement can be satisfied by
• On or before the first day in which the
  individual works for the employer, obtain a
  certification from state employment security
  agency that the individual is a member of a
  targeted group, or
• On or before the day employment is offered to an
  individual, complete Form 8850, Pre-Screening
  Notice and Certification Request for the Work
  Opportunity Credit, and send it to the state
  employment security agency no later than the 21st
  day after the individual begins work

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Work Opportunity Credit

• The Work Opportunity Credit May Be As Much As 40
  Of The Qualified First Year Wages Paid To
  Qualified Individuals Prior to January 1, 2008
• Eligible Employees Must Work 400 Hours (Summer
  Youth Employees Must Work At Least 120 Hours) To
  Be Subject To The 40 Credit Application
• Qualified First Year Wages Are Limited To 6,000
  Per Employee (With A 3,000 Limitation For Summer
  Youth)
• A Partial Credit Of 25 For Certified Employees
  Who Worked At Least 120 Hours, But Less Than 400
  Hours May Be Claimed By The Employer
• Work Opportunity Credit Is Claimed By Employer By
  Filing Form 5884, Work Opportunity Credit, With
  Their Business Tax Return

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Additional Sources of Information

• Internal Revenue Service website www.irs.gov
• Individual Income Tax Information IRS
  Publication 17 http//www.irs.gov/pub/irs-pdf/p1
  7.pdf
• Tax Guide for Small Business IRS Publication
  334 - http//www.irs.gov/pub/irs-pdf/p334.pdf
• Tax Highlights for Persons with Disabilities
  Publication 907 http//www.irs.gov/pub/irs-pdf/p
  907.pdf

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Additional Sources of Information

• Work Opportunity Credit IRS Publication 334 -
  http//www.irs.gov/pub/irs-pdf/p334.pdf
• Disabled Access Credit IRS Publication 535 -
  http//www.irs.gov/pub/irs-pdf/p535.pdf
• Architectural/Transportation Tax Deduction
  (Barrier Removal Cost) IRS Publication 535 -
  http//www.irs.gov/pub/irs-pdf/p535.pdf

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Additional Information

• Steven Mendelsohn, JD
• Law, Health Policy and Disability Center,
  University of Iowa, College of Law
• Co-principal investigator for the Asset
  Accumulation and Tax Policy Project
• smendel_at_panix.com
• 212-222-0312
• Stakeholder Partnerships, Education and
  Communication (SPEC) Division
• Senior Tax Analyst
• 404-338-7792
• Donald.dill_at_irs.gov