FAQ for Employers
Are there tax incentives for hiring individuals with disabilities?
The following information is available on the Department of Labor website. The Office of Disability Policy (ODEP) provides information about tax incentives to businesses. Please visit http://www.dol.gov/odep/topics/TaxIncentivesForEmployers.htm for information about the Small Business Tax Credit and the Architectural/Transportation Tax Deduction and http://www.doleta.gov/business/incentives/opptax/eta_default.cfm for the most up-to-date information about the Work Opportunity Tax Credit (WOTC).
Small Business Tax Credit: IRS Code Section 44, Disabled Access Credit
What is it? Small businesses may take an annual tax credit for making their businesses accessible to persons with disabilities.
Who is eligible? Small businesses that in the previous year earned a maximum of $1 million in revenue or had 30 or fewer full-time employees.
What is the amount? The credit is 50 percent of expenditures over $250, not to exceed $10,250, for a maximum benefit of $5,000. The credit amount is subtracted from the total tax liability.
Architectural/Transportation Tax Deduction: IRS Code Section 190, Barrier Removal
What is it and who is eligible? All businesses are eligible to take an annual deduction for expenses incurred to remove physical, structural, and transportation (i.e. vehicle-related) barriers for persons with disabilities at the workplace.
What is the amount? Businesses may take a tax deduction of up to $15,000 a year for expenses incurred to remove barriers for persons with disabilities. Amounts in excess of the $15,000 maximum annual deduction may be depreciated.
Work Opportunity Tax Credit (WOTC)
What is it? The Work Opportunity Tax Credit (WOTC) is a Federal tax credit incentive that the Congress provides to private-sector businesses for hiring individuals from twelve target groups who have consistently faced significant barriers to employment. The main objective of this program is to enable the targeted employees to gradually move from economic dependency into self-sufficiency as they earn a steady income and become contributing taxpayers, while the participating employers are compensated by being able to reduce their federal income tax liability.
How does it apply to persons with disabilities? Individuals who receive SSI (Supplemental Security Income) and individuals who have been referred by a Vocational Rehabilitation Agency (http://www.dshs.wa.gov/dvr/) are 2 of the 12 target groups eligible for the WOTC.
What is the amount? The WOTC benefit claimed by an employer is determined by the hours worked by the new employee and the employee’s WOTC target group. New employees who work at least 400 hours are eligible for a larger credit. The credit is 25% of qualified first-year wages for those employed at least 120 hours but fewer than 400 hours, and 40% for those employed 400 hours or more.
The maximum benefit amounts are determined by the employee’s WOTC target group. Most target groups' maximum credit is $2,400, but some are eligible to receive more:
- $2,400 for each new adult hire
- $1,200 for each new summer youth hire
- $4,800 for each new disabled veteran hire
What are the minimum employment requirements? All new adult employees must work a minimum of 120 hours to qualify for WOTC. Individuals hired as Summer Youth employees must work at least 90 days, between May 1 and September 15, to qualify for the credit.
What agency provides the WOTC certification? The local State Employment Security Agency (SESA). In Washington State, the WOTC coordinator is:Brian Roper
WA State Employment Security
P.O. BOX 9046
OLYMPIA, WA 98507-9046
How do I file for this credit? To receive certification that a new employee qualifies the employer for WOTC, the employer must:
- Complete page one of IRS Form 8850 (pdf) by the day the job offer is made.
- Complete page 2 of IRS IRS Form 8850 (pdf) after the individual is hired.
Complete either the one page ETA (Employment and Training Administration) Form 9061 (pdf) or Form 9062 as appropriate. For example:
- If the new employee has already been conditionally certified as belonging to a WOTC target group by a state workforce agency (SWA) or participating agency, complete the bottom part of ETA Form 9062, sign and date it, or
- If the new employee has not been conditionally certified, the employer and the new employee must complete, sign and date ETA Form 9061.
- Mail the completed and signed IRS and ETA forms to the employer's state workforce agency within 28 days after the employee's employment-start date for all individuals who begin work for an employer on or after January 1, 2007.