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

https://www.irs.gov/forms-pubs/about-publication-907

https://www.irs.gov/publications/p907

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