Thomson Reuters Examines ABLE Accounts

Thomson Reuters’ Checkpoint research service has released a special report on the recent tax extenders legislation that was approved last month by Congress, along with the new ABLE accounts that provide a type of tax-advantaged savings program for disabled individuals.

The special report examines the year-end tax package, H.R. 5771, which was signed into law by President Obama on December 19. It includes both the Tax Increase Prevention Act (TIPA) of 2014 and the Achieving a Better Life Experience (ABLE) Act of 2014.

TIPA extends dozens of expired or expiring individual, business and energy tax breaks. These tax extenders include more than 50 individual and business tax deductions, tax credits, and other tax-saving laws that have been on the books for years but technically are temporary because they have a specific end date.

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The report includes information on ABLE accounts, along with other tax changes in the new legislation.
For tax years beginning after Dec. 31, 2014, TIPA allows states to establish tax-exempt ABLE accountants to help people with disabilities build an account to pay for qualified disability expenses. Similar to a Qualified Tuition Program or Section 529 plan, a tax exemption would be allowed for an ABLE program. The amounts in an ABLE account would accumulate on a tax-exempt (or, in some cases, tax-deferred) basis.

“While this long-awaited legislation generally resolved the uncertainty of whether the extender tax breaks would be available for 2014, this resolution was short-lived as the provisions have already expired again,” said Catherine Murray, tax analyst with the Tax & Accounting business of Thomson Reuters, in a statement. “Whether they will be temporarily extended again in the future, or addressed in a more substantive way as part of a comprehensive tax reform effort, remains to be seen.”