IRS Calls for Lenient Spending Guidelines for Tax-Free ABLE Accounts Proposed rules for tax-free saving accounts for people with disabilities give states broad latitude in determining how the funds can be used. The Internal Revenue Service released the proposal in June, six months after the Achieving a Better Life Experience (ABLE) Act took effect. The federal law allows people with ... News in Brief
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News in Brief  |   September 01, 2015
IRS Calls for Lenient Spending Guidelines for Tax-Free ABLE Accounts
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Practice Management / Regulatory, Legislative & Advocacy / News in Brief
News in Brief   |   September 01, 2015
IRS Calls for Lenient Spending Guidelines for Tax-Free ABLE Accounts
The ASHA Leader, September 2015, Vol. 20, 16. doi:10.1044/leader.NIB9.20092015.16
The ASHA Leader, September 2015, Vol. 20, 16. doi:10.1044/leader.NIB9.20092015.16
Proposed rules for tax-free saving accounts for people with disabilities give states broad latitude in determining how the funds can be used.
The Internal Revenue Service released the proposal in June, six months after the Achieving a Better Life Experience (ABLE) Act took effect. The federal law allows people with disabilities to save money without risking their government benefits.
The proposal specifies how the new accounts should function and clarifies allowable ABLE money expenses.
The IRS took a lenient view in determining “qualified disability expenses” under the law, which mandates that money can be used for specific purposes—including transportation, housing and education—as well as “other expenses” as determined by regulators.
“The Treasury Department and the IRS conclude that the term ‘qualified disability expenses’ should be broadly construed to permit the inclusion of basic living expense,” the proposal states, “and should not be limited to expenses for items for which there is a medical necessity or which provide no benefits to others in addition to the benefit to the eligible individual.”
The view that expenses must merely offer a quality-of-life benefit for a person with a disability—rather than be medically necessary—means that the ABLE account-holder could, for example, use the money to purchase a smartphone or computer tablet.
However, proposed reporting and oversight requirements—including paperwork demonstrating that a purchase is a qualified expense—are stringent, and could complicate administering and using the accounts.
The proposed rules will be up for public comment for 90 days before the IRS issues final regulations.
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September 2015
Volume 20, Issue 9