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Tax Credits for Employers
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Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) is a federal income tax credit that encourages employers to hire seven targeted groups of job seekers who begin work before January 1, 2008. WOTC can reduce employer federal tax liability by as much as $2,400 per new hire. WOTC applies to new hires who begin work between January 1, 2006 and January 1, 2008 and that belong to one of six WOTC target groups: *Wefare recipients (not including Medicare or Medicaid) Welfare-to-Work Tax Credit The Welfare-to-Work Tax Credit is a federal income tax credit that encourages employers to hire long-term welfare recipients who begin work any time on/after January 1, 2006, and before January 1, 2008. This tax credit can reduce employer federal tax liability by as much as $8,500 per new hire. The Welfare-to-Work tax credit will be administered under the Work Opportunity Tax Credit (WOTC) certification procedures established by the Small Business Job Protection Act of 1996. The Welfare-to-Work Tax Credit applies to new hires who begin work on/after January 1, 2006, and before January 1, 2008, and are employed at least 400 hours or 180 days. The new hires must be long-term welfare recipients in one of the following groups: *Members of a family that received Aid to Families with Dependent Children (AFDC) Temporary Assistance for Needy Families (TANF), for at least the 18 consecutive months before date of hire Employers must apply for and receive certification from their state employment agency that their new hire is a long-term AFDC or TANF recipient before they can claim the Welfare-to-Work Tax Credit on their federal tax return. Employers must apply for and receive certification from Colorado Department of Labor & Employment WOTC Unit, verifying that their new hire is a member of a WOTC target group before they can claim the WOTC on their federal tax return. Click here to learn more about these tax credits. |
Barrier Removal Tax Credit
This incentive is an annual federal tax deduction for the removal of physical, structural, and transportation barriers for people with disabilities in the work place. It is available to all businesses and is up to $15,000 a year for expenses related to barrier removal. Amounts in excess of $15,000 maximum annual deduction can be depreciated. Some costs that may be deducted include:
*Providing accessible parking spaces, ramps, and curb cuts
*Installing telephones, water fountains, and restrooms that are accessible to persons in wheel chairs
*Making walkways at least 48 inches wide
Barrier removal expenses that are not covered would be the cost of new construction, the complete renovation of a facility or public transportation vehicle, normal replacement of depreciable property.
Small Business Tax Credit for Barrier Removal
This federal tax credit covers any expenses related to providing people with disabilities access to your building, services or programs. The credit is for small businesses that earn a maximum of $1 million in revenue (for the previous year) or have 30 or fewer full time employees. The credit is 50% of expenditures over $250, and expenditures cannot exceed $10,250 with a maximum benefit of $5,000. Some costs that may be deducted include:
*Removal of barriers in buildings and transportation that prevent a business from being accessible to or usable by individuals with disabilities
*Using sign language interpreters for employees or customers who have hearing impairments
*The purchase of adaptive equipment
Click here to read the ADA Guide for Small Buisnesses
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