Living with a disability can come with additional expenses. The tax benefits offered by ABLE savings accounts can appeal to eligible individuals who are looking to achieve greater financial security, without impacting certain disability benefits, such as Medicaid and Supplemental Security Income (SSI).
Here are four ways ABLEnow can help you make the most of your money.
Earnings on investments in your ABLEnow account grow free from state and federal taxes, and are never taxed when used for qualified disability expenses.
Saver’s Tax Credit
Certain ABLEnow customers may be eligible for a federal tax credit just for making contributions to their account. The Saver’s Tax Credit can be applied to up to $2,000 in ABLE contributions for eligible individuals.
Favorable Gift Tax Treatment
Contributions to ABLEnow accounts are generally treated as a completed gift to the account owner. This means a donor’s contributions of up to $15,000 a year to an ABLEnow account are usually gift tax free.
Virginia State Income Tax Deduction
ABLEnow is available to eligible individuals in all 50 states. But as the Virginia-sponsored ABLE savings program, ABLEnow offers unique advantages for eligible Virginians.
ABLEnow contributions made by Virginia taxpayers may qualify the contributor for a Virginia state income tax deduction of up to $2,000 per year with an unlimited carryforward to future tax years, subject to certain restrictions. Contributors age 70 and above may deduct the entire amount contributed to an ABLEnow account in one year.
Consult a trusted tax professional for recommendations on maximizing the federal and state tax benefits of an ABLE account.
ABLEnow cannot and does not provide legal, financial or tax advice, and the foregoing information should not be construed as such with respect to the consequences for any particular individual as a result of contributions or withdrawals from an ABLEnow account. Since each individual’s legal, financial, and tax situation is unique, a qualified professional should be consulted on any of the issues discussed in this article.