Did you know that you can qualify for the ADA tax credit by updating your business website to proper accessibility standards? This means up to a $5,000 tax credit could be available to your small business.
In this article:
- ADA compliance applies to not only physical accommodations, but your business website, too.
- If your business website doesn’t adhere to accessibility standards, you could face litigation.
- Small businesses with less than $1M in annual revenue or fewer than 30 full-time employees can claim up to a $5,000 ADA tax credit for updating their website to be ADA compliant.
What does it mean for a business website to be ADA compliant?
The Americans with Disabilities Act created regulations meant to prohibit discrimination against people with disabilities. Part of these regulations fall to employers.
It’s easy to think of ADA compliance in terms of accessible parking or other accommodations for employees with disabilities. However, what many employers fail to realize is that your business website must also be ADA compliant.
The U.S. Department of Justice explicitly states:
“For these reasons, the Department has consistently taken the position that the ADA’s requirements apply to all the goods, services, privileges, or activities offered by public accommodations, including those offered on the web.”
So what does ADA compliance for a business website look like?
Examples of website accessibility include:
- Proper color contrast. Poor color contrast may make it hard for those with color blindness to read text on a page.
- Providing video captions. Without captions, those with hearing impairments won’t be able to access information included in the video.
- Including alt-text with images. This helps people who use screen readers to understand what images are featured on a page.
- Compatibility with screen reader technology. This technology is used by those with sight impairments; some websites can interfere with this type of tech.
You can find more guidance on web accessibility through ADA.gov.
What can happen if your business website is not ADA compliant?
If your business website fails ADA compliance, you could face litigation. In fact, according to the American Bar Association, “since 2018, website and mobile app accessibility lawsuits have made up roughly a fifth of all ADA Title III filings in federal courts, which now consistently exceed 10,000 lawsuits annually.”
The Web Accessibility Initiative offers Web Content Accessibility Guidelines (WCAG 2.1), an international standard for accessibility that’s broken into three levels: Level A, Level AA, and Level AAA.
If you work with an agency for website design and development, make sure the agency understands — and follows! — these accessibility standards.
What is the ADA tax credit for websites?
The IRS offers tax credits to encourage businesses to comply with the Americans with Disabilities Act. Tax credits, unlike tax deductions, offer a dollar-to-dollar reduction in the tax you owe for the year. For example, if you owe $20,000 in taxes for the year, but received an ADA tax credit of $4,000, that would reduce your tax bill to $16,000.
Only small businesses are eligible to receive this ADA tax credit for websites. To qualify, your business must gross $1M or less in revenue for the tax year or employ 30 or fewer full-time staff.
Keep in mind that you cannot take both a credit and a full deduction for the same expense. For example, if you qualify for this credit and your website expense is $1,000, you can take a $500 credit. However, you can then take only a $500 deduction on the second half of that expense — not the full $1,000 deduction.
How can your business claim the ADA tax credit for websites?
C Corporations, single-owner LLCs, and sole proprietorships can claim this ADA tax credit via IRS Form 8826, while partnerships and S Corporations report the credit on Form 3800.
When you work with a Landmark CPA, you can be confident your small business won’t miss valuable tax credits like these. Contact us to get started.