How to Get ADA Website Accessibility Tax Credit and Tax Deduction for Your Business

By Tim Absalikov
Founder and Acting CEO at Lasting Trend
Tim is an expert in technical SEO, on-page optimization and linkbuilding. He has over a decade of experience in Digital Marketing for B2C companies in US and Europe.

The Americans with Disabilities Act (ADA) demands that all websites be accessible by differently-abled people. Many websites do offer features that allow these groups of individuals to use a website easily. Thus, they end up not getting what they need. However, the ADA act directs web page owners to know the accessibility needs of their audience.

However, making an ADA compliance website can be costly. This has led to businesses not ADA compliant being sued or sent demand letters. Fortunately, the recent federal code amendments state that you could get up to $5,000 ADA tax credit or ADA tax deduction – sometimes both. This is to cushion against the exorbitant compliance costs.

This review tells you how you can get this tax credit. So, read on. 

What Is the ADA Compliant Website Tax Credit?

ADA tax credit is a credit applied to a business website tax return to cover the expenditures incurred while making the site accessible for persons with disabilities. 

The Act demands that all organizations and businesses remove barriers that make it harder for individuals with special needs to access various places. The hurdles make it impossible for challenged people to enjoy various perks. 

Many Americans are on the run to comply with ADA Act, which came into force in 1990. Typically, the guidelines in the Act require that business people offer reasonable accommodation and ensure accessible parking for special needs people. 

website accessibility tax credit

But also, under the same 1990 Act, organizations and business websites are public, falling directly under the ADA umbrella. Therefore, anyone owning a business site must ensure that its accessibility is not in question. 

Accessibility of a website means designing a site to suit the needs of the visually impaired, hearing disability, cognitive, physical, neurological, as well as speech,   disabilities. An ADA-compliant website ensures that these individuals navigate, perceive, understand and interact with the Web. 

Examples of ways to make a website accessible include:

  • Optimize for screen readers – image with alternative texts 
  • Providing audio alternatives 
  • Ensure easier navigation through a keyboard and many others.

A tax credit comes into play to offset the burden of complying with ADA. All small businesses with gross receipts of $1 million or less or with less than 30 full-time employees in the preceding tax year qualify according to the IRS. The business can receive not more than 50 percent of qualified expenses. The expenses include costs associated with website ADA compliance in the form of an IRS tax credit. The condition is; the expenses must be between $250 and $10,000 for the taxable year.

Benefits of Having Ada-Compliant Website

The goal of ADA was to ensure that differently-abled individuals receive not less than enough chances than others. Today, if you run an app or a site, you must make it highly accessible. Here are the benefits of making a business site comply with ADA: 

Equal Access to Everyone

Always ensure that every individual can access your website without much hustle. When the general public, customers, and employees get easy access to your brand, it uplifts your brand image. ADA, a complaint-driven law, ensures equal access. The impaired people can file lawsuits if they cannot use a business website. 

Complying with ADA regulations is undoubtedly expensive. That’s why the IRS ADA tax credit reform was passed to aid website owners make their websites ADA compliant. This makes it pretty straightforward for businesses to expand their website’s online reach alongside facilitating their page visitors’ data gathering and decision-making process.

Avoid Unnecessary Lawsuits

Many lawsuits have been filed, or at least many business owners have received a demand letter because their websites are not ADA compliant. According to ADA, if a person files a case and can show the violation of ADA, they are awarded attorney’s fees.

This implies that a website owner pays to correct the ADA violation and the plaintiff’s attorney’s fees plus their own attorney’s fees. However, these regulations vary from one state to another. For instance, in Georgia, you may face criminal charges if your web pages are ADA non-compliant. When you comply, you avert such undesirable outcomes, plus, you get the compliance tax credit. 

Difference Between ADA Tax Credit vs. ADA Tax Deduction

Tax credits and tax deductions should be a satisfying part of tax return preparation. The US government offers these two incentives for organizations and businesses. While both reduce your business’s tax bill, they work differently. Besides, you’ll receive them based on your ADA IRS tax credit qualifications. 

ADA Tax Credit Explanation

The ADA tax credit directly reduces the tax amount you owe the government. Typically, the tax credits are directly deducted from your taxes, giving you a dollar-for-dollar reduction. For instance, if a tax credit is valued at $1,000, it lowers your tax bill by $1,000.

Qualification for the tax credit varies. However, a qualified organization can take a tax credit of up to $5,000 to offset some or all the expenses incurred. Remember, qualified expenditures range between $250 and $10,250 for a taxable year. So, the initial $250 spend on improving a website’s accessibility isn’t part of the ADA compliant tax credit calculation. 

Your total ADA compliance website tax credit is calculated by adding the total cost and then subtract $250. Divide this amount by 2 – it should be 50% of your eligible expenditure. 

ada compliant website tax credit

ADA Tax Deduction Explanation

A tax deduction reduces the income amount subject to taxes, i.e., it lowers the taxable income by a specific percentage. All businesses that made ADA accommodations are eligible for the ADA tax deduction, with a  maximum deductible amount of $15,000 per year. 

Thus, you may be eligible for the tax deduction but not the ADA-compliant website tax credit. ADA tax deduction offers businesses a dollar-for-dollar reduction of their total tax liability. 

Is Your Business Eligible for the Ada Tax Credit?

Business websites that qualify for the  ADA Compliant Tax Credit must meet certain criteria. The checkpoints for qualification are:

  • Annual total revenue of $1 million or less in the preceding tax year
  • Less than 30 full-time employees in the prior tax year 

A full-time employee is one who completes at least 30 hours per week for at least 20 calendar weeks in a taxable year.

Expenditure covered are ADA compliance website costs for:

  • Providing audio materials for hearing-impaired persons 
  • Providing visual materials to persons with visual impairments
  • Eliminating hindrances that prevent differently-abled persons from accessing your website 
  • Modification of website elements to accommodate people with disabilities

How to Apply

Check out the general instruction on the ADA tax credit form 8826. The overall application procedure for applying the for ADA tax credit for website accessibility are:

  • Enter (on Line 1) the total qualified ADA compliance website expenditures 
  • Subtract $250 
  • Multiply the result by 50% (0.5) to know your ADA-compliant tax credit. 
  • Report the result from above plus other tax credits on Form 3800, General Business Credit.

The time required to complete and file ADA tax credit form 8826 might vary depending on a specific situation. Therefore, ask your tax preparer before filing for a tax credit to ensure your eligibility.

Contact Us To Get Your Free Consultation About ADA Compliance

ADA tax credit for websites is beneficial for businesses that struggle to meet the ADA accessibility requirements. Nevertheless, remodeling or creating an ADA compliant makes a web page available to a wider audience. In turn, this offers lucrative opportunities to boost brand interactions and long-term profitability. While the process might be expensive, the gains are much more.

Ready to start getting a massive following online? Don’t get stranded – contact us today, and we will get you started free of charge. 

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