Small Business Tax Deductions

							      Disability Program
      Navigator Training
     A Joint Initiative of the
    U.S. Department of Labor
             and the
  Social Security Administration
Working with Employers:
Disability-Related Tax Credits and Deductions for
Employers and Employees
James Schmeling, J.D.
Federal and State Tax Credits and
Deductions
 There are several tax credits and
  deductions for employers who hire and
  accommodate employees with disabilities
 There are also tax credits and deductions
  which employees with disabilities may use
 Navigators should know about the credits
  and share information with employers and
  employees about the credits
                           Disability Program Navigator Training
                          Washington, D.C. / November 3 – 6, 2003
Small Business Disabled Tax
Credit
   Purpose
    Remove barriers and accommodate employees and customers with
    disabilities
   Expenses Covered
    Acquire or modify Devices & Equipment
    Remove Barriers
    Hire Interpreters
    To comply with the ADA and its rules
   Amount of the Tax Break
    50% of $10,250 spent each year, less the first $250. $5,000. annual
    cap.




                                             Disability Program Navigator Training
                                            Washington, D.C. / November 3 – 6, 2003
Small Business Disabled Tax
Credit
   Qualifying Businesses
    ADA Title I or Title III entity and; 30 or fewer employees
    OR $1 million or less in gross annual receipts
   Legal References
    26 United States Code Section 44
    No IRS regulations
      Private Ruling 9716009
   More information
    http://www.usdoj.gov/crt/ada/taxpack.htm


                                        Disability Program Navigator Training
                                       Washington, D.C. / November 3 – 6, 2003
Architectural and Transportation
Barrier Removal Tax Deduction
   Purpose
    Remove barriers, make business facilities and
    public transportation vehicles accessible
   Expenses Covered
    Remove Barriers to disabled and elderly
    Meet IRS Standards
   Amount of the Tax Break
    $15,000 annual cap

                                Disability Program Navigator Training
                               Washington, D.C. / November 3 – 6, 2003
Architectural and Transportation
Barrier Removal Tax Deduction
   Qualifying Businesses
    Any taxpayer owning or leasing a facility or
    public transportation vehicle in its business.
   Legal References
    26 U.S.C. 190
    26 Internal Revenue Code Section 1.90
   More information
    http://www.usdoj.gov/crt/ada/taxpack.htm

                                   Disability Program Navigator Training
                                  Washington, D.C. / November 3 – 6, 2003
Work Opportunity Tax Credit
   Purpose
    Hire workers with disabilities and integrate the workforce
   Expenses Covered
    Part of first year’s wages paid to worker with a disability, referred by
    VRS; others
   Amount of the Tax Break
    40% of the first $6,000 in wages paid the first year
    $2,400 cap per EE
   Qualifying Businesses
    Employer who hires a person with a disability via a Voc Rehab
    Services referral




                                                Disability Program Navigator Training
                                               Washington, D.C. / November 3 – 6, 2003
Work Opportunity Tax Credit
   Legal References
    26 U.S.C. Section 51
    26 I.R.C. Section 1.51
   More information http://www.uses.doleta.gov/wotcdata.asp,
    http://www.uses.doleta.gov/updates.asp, and
    http://www.dol.gov/odep/media/press/tax.htm
    State WOTC Coordinators Contact List
    http://www.uses.doleta.gov/pdf/sesacoorddirect00.pdf
    Work Opportunity and Welfare-to-work Tax Credits Reporting
    System User’s Guide
    http://www.uses.doleta.gov/pdf/WOTC_WtW_Reporting_System_Us
    er_s_Guide.pdf



                                        Disability Program Navigator Training
                                       Washington, D.C. / November 3 – 6, 2003
Welfare-to-Work Tax Credit
   Purpose
    Encourage employers to hire long-term family assistance recipients
    who begin to work any time after December 31, 1997, and before
    January , 2004, to help people move from welfare to work and
    economic self-sufficiency.
   Expenses Covered
    Wages, including tax-exempt amounts received under accident or
    health plans as well as educational assistance and dependent
    assistance programs.
   Amount of the Tax Break
    35% of qualified wages for the first year of employment and 50% for
    the second year. Qualified wages are capped at $10,000 per year.



                                             Disability Program Navigator Training
                                            Washington, D.C. / November 3 – 6, 2003
Welfare-to-Work Tax Credit
   Qualifying Businesses
    Employers which apply for and receive certification from
    their State Employment Security Agency (SESA), also
    known as the State Workforce Agency (SWA), that their
    new hire is a long-term TANF/AFDC recipient.
   Legal References
    P.L. 105-34, Taxpayer Relief Act of 1997
    Re-authorized by P.L. 107-147, Job Creation and
    Worker Assistance Act of 2002
   More information http://www.uses.doleta.gov/wtw.asp

                                      Disability Program Navigator Training
                                     Washington, D.C. / November 3 – 6, 2003
Example State Tax Credits
and Deductions (MANY more exist)
 Iowa Assistive Device Tax Credit
 Iowa Small Business Income Tax
  Deduction
 New York Workers with Disabilities
  Employment Tax Credit (WETC)
 Maryland Disability Employment Tax
  Credit
                          Disability Program Navigator Training
                         Washington, D.C. / November 3 – 6, 2003
Iowa Assistive Device Tax Credit
   Purpose
    Hire, retain and accommodate employees with
    disabilities
   Expenses Covered
    Buy, Rent or Modify Assistive Devices
    Make Workplace Modifications
   Amount of the Tax Break
    50% of the first $5,000 spent per year
    $2,500. annual cap
    $500K fiscal year cap: earliest filed claims paid
                                  Disability Program Navigator Training
                                 Washington, D.C. / November 3 – 6, 2003
Iowa Assistive Device Tax Credit
   Qualifying Businesses
    Small Businesses with no more than 14 employees OR
    $3 million or less in annual gross receipts
   Legal References
    Iowa Code Sections 422.11E and 422.33.8A
    IDED, Iowa Admin. Code 261-66 and IDRF, Iowa Admin.
    Code 701-42.14
   More information
    http://www.iowasmart.com/services/small_business/tax_
    credit.html
    http://www.state.ia.us/tax/1040%20Expanded/Line/02Lin
    e66.html

                                    Disability Program Navigator Training
                                   Washington, D.C. / November 3 – 6, 2003
Iowa Small Business Income Tax
Deduction
   Purpose
    Hire workers with disabilities and integrate the
    workforce
   Expenses Covered
    Part of first year’s wages paid to workers with
    disabilities
   Amount of the Tax Break
    65% of wages paid
    $20,000 cap per employee

                                   Disability Program Navigator Training
                                  Washington, D.C. / November 3 – 6, 2003
Iowa Small Business Income Tax
Deduction
   Qualifying Businesses
    Small businesses/Farms with 20 or fewer
    employees, AND $3 million or less in gross
    revenues
   Legal References
    Iowa Code Section 422.7(12)
    Iowa Admin. Code 701 IAC 40.21, 53.11, 59.8.
   More information
    http://www.state.ia.us/tax/educate/78578.html

                                Disability Program Navigator Training
                               Washington, D.C. / November 3 – 6, 2003
New York Workers with Disabilities
Employment Tax Credit (WETC)
   Purpose
    Assist individuals with disabilities in securing employment - WETC is
    an employer friendly benefit for hiring workers with disabilities
   Expenses covered
    Part of second year’s wages paid to employees with disabilities for
    employees who meet the eligibility requirements for certification
    under the Work Opportunity Tax Credit (WOTC) program as a
    vocational rehabilitation referral; and, who are certified by the New
    York State Education Department's Office of Vocational and
    Educational Services for Individuals with Disabilities (VESID), or are
    certified by the Office of Children and Family Services' Commission
    for the Blind and the Visually Handicapped (CBVH)




                                              Disability Program Navigator Training
                                             Washington, D.C. / November 3 – 6, 2003
New York Workers with Disabilities
Employment Tax Credit (WETC)
   Amount of the tax break
    35% of the first $6,000 in wages paid during the second year of
    employment while the WOTC is in effect, otherwise it is available in
    the first year of employment
   Qualifying businesses
    See the PDF linked below – certain corporations and businesses
    specifically noted
   Legal References
    Chapter 142 of the New York State Laws of 1997
   More information
    http://www.labor.state.ny.us/business_ny/developing_workforce/eds
    u/wetc.htm
    http://www.tax.state.ny.us/pdf/memos/Corporation/m98_3c.pdf


                                             Disability Program Navigator Training
                                            Washington, D.C. / November 3 – 6, 2003
Maryland Disability Employment
Tax Credit
   Purpose
    Enhance employment opportunities for persons
    with disabilities as defined by the Americans with
    Disabilities Act (ADA) for employees with
    disabilities hired on or after October 1, 1997 but
    before June 30, 2007
   Expenses covered
    Portions of the first and second year’s wages,
    and also for work-related childcare or
    transportation expenses paid by the employer.

                                  Disability Program Navigator Training
                                 Washington, D.C. / November 3 – 6, 2003
Maryland Disability Employment
Tax Credit
   Amount of the tax break
    For each taxable year a credit is allowed in an amount equal to 30% of up to
    the first $6000 ($1800) of wages paid during the first year and 20% of up to
    the first $6000 ($1200) during the second year of employment. A credit of
    up to $600 of the qualified childcare or transportation expenses incurred
    during the first year of employment, and up to $500 for the second year.
   Qualifying businesses
    Sole proprietorships, corporations, tax-exempt non-profit organizations and
    pass-through entities, such as partnerships, subchapter S corporations,
    limited liability companies and business trusts may claim the tax credit.
   More information
    http://www.dllr.state.md.us/employment/mdetc.htm
    http://business.marylandtaxes.com/taxinfo/taxcredit/disability/default.asp




                                                 Disability Program Navigator Training
                                                Washington, D.C. / November 3 – 6, 2003
Additional Resources
   Tax Incentives For Business
    http://www.dol.gov/odep/pubs/ek97/tax.htm
   Assistive Technology Tax Credits – RESNA
    information page
    http://128.104.192.129/taproject/policy/funding/t
    axcredit.html
   SPECIAL THANKS to the Iowa Clinical Law
    Program for their chart with information on
    Federal Tax Credits and Iowa Tax Credits


                                  Disability Program Navigator Training
                                 Washington, D.C. / November 3 – 6, 2003
       This training has been
   designed and developed by the

     Law, Health Policy
 & Disability Center (LHPDC)
              of the
University of Iowa College of Law

     disability.law.uiowa.edu

                        Disability Program Navigator Training
                       Washington, D.C. / November 3 – 6, 2003