Disability Resources Focus on Federal Tax
IRS Publication 907 focuses on tax issues impacting disabled individuals. The main focus of the IRS publication is ABLE accounts. ABLE accounts are tax-advantaged accounts which are funded by family members to cover qualified expenses for the disabled individual. The main disadvantage of an ABLE account is the contribution limitation. Per IRS, $17,000.
Contributions. Contributions (including any contributions from a section 529 program, but not including contributions of the designated beneficiary’s compensation income made under section 529A(b)(2)(B)) made to your ABLE account in 2023 can’t exceed $17,000.
Links to the publication
ABLE accounts must be compared to Special Needs Trusts. You are permitted to have both disability vehicles. While Special Needs Trusts are more flexible and allow for a higher contribution amounts, they have to be drafted by a qualified attorney. In Florida, we have an elder law section. Those lawyers focus on benefits planning. In Florida, we have the ABLE United program. Here’s a link to an article that compares Special Needs Trust and ABLE accounts.
By: Lawrence Jay Stein CPA, J.D, LLM-Tax, CFP