You’ve probably heard about the tax benefits that were renewed last December that you were able to claim on your 2014 federal income tax return. But do you know about other new beneficial tax rules that are effective for 2015? Here are two.
- ABLE accounts. These accounts are part of a new program that state governments can set up during 2015. ABLE (Achieving a Better Life Experience) accounts are designed to help you build savings to care for yourself or a loved one with disabilities while maintaining eligibility for benefit programs such as Medicaid. Generally you’ll qualify for an ABLE account if your disability occurred before age 26.Once state rules are established, you’ll be able to contribute a non-deductible annual amount equal to the federal gift tax exclusion. For 2015, that’s $14,000. Earnings on the money in the account are not taxable when you use withdrawals to pay for qualified expenses related to your disability. Qualified expenses include costs for housing, education, transportation, and medical services.
There is a limit on the total amount you can contribute to an ABLE account, and the accounts include a Medicaid payback requirement. In addition, withdrawals for nonqualified expenses are subject to penalties.
- 529 plan investment changes. In the past, you could change the investment strategy of your 529 qualified tuition plan once per year, or when you changed the designated beneficiary of the account. The new rules allow investment strategy changes twice per year.
Have questions about the new rules? Give us a call. We’ll keep you up-to-date.