The Tax Cuts and Jobs Act made several changes to ABLE accounts. ABLE accounts were created by The Achieving a Better Life Experience Act of 2014. They are authorized tax-advantaged section 529A accounts to help disabled people pay for qualified disability-related expenses.

Here are changes that will affect people who have an ABLE account:

Annual Contribution limit increase

• The limit is $15,000 in 2018.
• Certain employed ABLE account beneficiaries may make an additional contribution up to the lesser of these amounts:
  o The designated beneficiary’s compensation for the tax year
  o The poverty line for a one-person household. For 2018, this amount is $12,140 in the continental U.S., $13,960 in Hawaii and $15,180 in Alaska

Saver’s Credit

• ABLE account designated beneficiaries may now be eligible to claim the Saver’s Credit for a percentage of their contributions.
• The credit is claimed on Form 8880, Credit for Qualified Retirement Savings Contributions. The Saver’s Credit is a non-refundable credit available to individuals who meet these three requirements:
  o Are at least 18 years old at the close of the taxable year
  o Are not a dependent or a full-time student
  o Meet the income requirements

Rollovers and transfers from section 529 plans

• Families may now roll over funds from a 529 plan to another family member’s ABLE account.
• The ABLE account must be for the same beneficiary as the 529 account or for a member of the same family as the 529 account holder. Rollovers from a section 529 plan count toward the annual contribution limit.
  o Here is an example: the $15,000 annual contribution limit would be met by parents contributing $10,000 to their child’s ABLE account and rolling over $5,000 from a 529 plan to the same ABLE account.

States can offer ABLE accounts to help people who become disabled before age 26 and their families save and pay for disability-related expenses. These expenses include housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology and personal support services. Though contributions aren’t deductible for Federal tax purposes, distributions, including earnings, are tax-free to the beneficiary, as long as they are used to pay qualified disability expenses.

More Information:

• ABLE Accounts – Tax Benefit for People with Disabilities
• Tax reform allows people with disabilities to put more money into ABLE accounts, expands eligibility for Saver’s Credit
• Publication 907, Tax Highlights for Persons with Disabilities
• Form 1099-QA, Distributions from ABLE Accounts
• Form 5498-QA, ABLE Account Contribution Information
• Instructions for Forms 1099-QA and 5498-QA

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WASHINGTON — The Internal Revenue Service issued proposed regulationstoday for a new provision allowing many owners of sole proprietorships, partnerships, trusts and S corporations to deduct 20 percent of their qualified business income.

The new deduction — referred to as the Section 199A deduction or the deduction for qualified business income — was created by the Tax Cuts and Jobs Act. The deduction is available for tax years beginning after Dec. 31, 2017. Eligible taxpayers can claim it for the first time on the 2018 federal income tax return they file next year.

The deduction is generally available to eligible taxpayers whose 2018 taxable incomes fall below $315,000 for joint returns and $157,500 for other taxpayers. It’s generally equal to the lesser of 20 percent of their qualified business income plus 20 percent of their qualified real estate investment trust dividends and qualified publicly traded partnership income or 20 percent of taxable income minus net capital gains.

Deductions for taxpayers above the $157,500/$315,000 taxable income thresholds may be limited. Those limitations are fully described in the proposed regulations.

Qualified business income includes domestic income from a trade or business. Employee wages, capital gain, interest and dividend income are excluded.

In addition, Notice 2018-64, also issued today, provides methods for calculating Form W-2 wages for purposes of the limitations on this deduction. More information may be found at www.IRS.gov.

Taxpayers may rely on the rules in these proposed regulations until final regulations are published in the Federal Register.

Written or electronic comments and requests for a public hearing on this proposed regulation must be received within 45 days of publication in the Federal Register.

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Taxpayers can access their federal tax information through a secure login at IRS.gov/account. After logging in, the user can view:

• The amount they #owe
• Their payment history
• #Tax records
• Key information from their most recent tax return as originally filed

A taxpayer can monitor their personal tax account by keeping track of payments and taxes owed. This online information is the same as what’s provided by IRS representatives.

Taxpayers who owe can pay from their bank account or with a debit or credit card. Taxpayers who need more time to pay can also apply for a payment plan, including an installment agreement. Other payment options are available at IRS.gov/payments.

First-time users must authenticate their identity through the Secure Access process. Additional information about secure access can be found at IRS.gov/secureaccess. Returning users can log in with their user name and password.

The account balance will update no more than once every 24 hours, usually overnight. After making a payment, users should allow up to three weeks for it to appear in the payment history.

The IRS continues to add features to help individual taxpayers conveniently monitor their account information online.

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