Disability Program Navigator TrainingA Joint Initiative of the

U.S. Department of Laborand the

Social Security Administration

Working with Employers: Disability-Related Tax Credits and Deductions for Employers and EmployeesJames Schmeling, J.D.

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

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 TrainingWashington, D.C. / November 3 – 6, 2003

Small Business Disabled Tax Credit Purpose

Remove barriers and accommodate employees and customers with disabilities

Expenses CoveredAcquire or modify Devices & EquipmentRemove BarriersHire InterpretersTo comply with the ADA and its rules

Amount of the Tax Break50% of $10,250 spent each year, less the first $250. $5,000. annual cap.

Disability Program Navigator TrainingWashington, 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 References26 United States Code Section 44No IRS regulations

Private Ruling 9716009 More information

http://www.usdoj.gov/crt/ada/taxpack.htm

Disability Program Navigator TrainingWashington, 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 CoveredRemove Barriers to disabled and elderlyMeet IRS Standards

Amount of the Tax Break$15,000 annual cap

Disability Program Navigator TrainingWashington, 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 References26 U.S.C. 19026 Internal Revenue Code Section 1.90

More information http://www.usdoj.gov/crt/ada/taxpack.htm

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

Work Opportunity Tax Credit

PurposeHire workers with disabilities and integrate the workforce

Expenses CoveredPart of first year’s wages paid to worker with a disability, referred by VRS; others

Amount of the Tax Break40% of the first $6,000 in wages paid the first year$2,400 cap per EE

Qualifying BusinessesEmployer who hires a person with a disability via a Voc Rehab Services referral

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

Work Opportunity Tax Credit

Legal References26 U.S.C. Section 5126 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.pdfWork Opportunity and Welfare-to-work Tax Credits Reporting System User’s Guide http://www.uses.doleta.gov/pdf/WOTC_WtW_Reporting_System_User_s_Guide.pdf

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

Welfare-to-Work Tax Credit

PurposeEncourage 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 CoveredWages, including tax-exempt amounts received under accident or health plans as well as educational assistance and dependent assistance programs.

Amount of the Tax Break35% 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 TrainingWashington, D.C. / November 3 – 6, 2003

Welfare-to-Work Tax Credit

Qualifying BusinessesEmployers 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 ReferencesP.L. 105-34, Taxpayer Relief Act of 1997Re-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 TrainingWashington, D.C. / November 3 – 6, 2003

Example State Tax Creditsand 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 TrainingWashington, D.C. / November 3 – 6, 2003

Iowa Assistive Device Tax Credit Purpose

Hire, retain and accommodate employees with disabilities

Expenses CoveredBuy, Rent or Modify Assistive DevicesMake Workplace Modifications

Amount of the Tax Break50% of the first $5,000 spent per year

$2,500. annual cap$500K fiscal year cap: earliest filed claims paid

Disability Program Navigator TrainingWashington, 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 ReferencesIowa Code Sections 422.11E and 422.33.8AIDED, Iowa Admin. Code 261-66 and IDRF, Iowa Admin. Code 701-42.14

More informationhttp://www.iowasmart.com/services/small_business/tax_credit.htmlhttp://www.state.ia.us/tax/1040%20Expanded/Line/02Line66.html

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

Iowa Small Business Income Tax Deduction Purpose

Hire workers with disabilities and integrate the workforce

Expenses CoveredPart of first year’s wages paid to workers with disabilities

Amount of the Tax Break65% of wages paid$20,000 cap per employee

Disability Program Navigator TrainingWashington, 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 ReferencesIowa Code Section 422.7(12)Iowa Admin. Code 701 IAC 40.21, 53.11, 59.8.

More informationhttp://www.state.ia.us/tax/educate/78578.html

Disability Program Navigator TrainingWashington, 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 coveredPart 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 TrainingWashington, 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 businessesSee the PDF linked below – certain corporations and businesses specifically noted

Legal ReferencesChapter 142 of the New York State Laws of 1997

More informationhttp://www.labor.state.ny.us/business_ny/developing_workforce/edsu/wetc.htmhttp://www.tax.state.ny.us/pdf/memos/Corporation/m98_3c.pdf

Disability Program Navigator TrainingWashington, 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 coveredPortions of the first and second year’s wages, and also for work-related childcare or transportation expenses paid by the employer.

Disability Program Navigator TrainingWashington, 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 businessesSole 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 informationhttp://www.dllr.state.md.us/employment/mdetc.htmhttp://business.marylandtaxes.com/taxinfo/taxcredit/disability/default.asp

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

Additional Resources

Tax Incentives For Businesshttp://www.dol.gov/odep/pubs/ek97/tax.htm

Assistive Technology Tax Credits – RESNA information page

http://128.104.192.129/taproject/policy/funding/taxcredit.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 TrainingWashington, 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