ABLE

Tax Time Tips

February 6, 2024

CART Provided by SignNexus:  This rough edit transcript, which may contain missing, misspelled or paraphrased words, is only provided for your immediate review and is not certified as verbatim and is not to be cited in any way.

[RECORDING]

>>JODY:  Hello, everyone.  Thank you for joining us today.  The webinar will begin momentarily.  We are excited that we are also streaming live on Facebook.  So if you are there, please just wait and hang on about four more minutes.  Thank you.

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>>JODY:  Hello, everyone.  Thank you for joining us today.  The webinar will begin momentarily.  Please note that the webinar will be recorded and the materials, including a transcript, will be placed on the ABLE National Resource Center website, ablenrc.org, along with the other webinars that are on demand.  Welcome.

>>JODIE PITCOCK:  Welcome.  If you are here for ABLE Tax Time Tips webinar, you are in the right place.  We will be starting in just about one or two minutes, as people are logging into the webinar now.  We want to give everyone a chance to log in, get their audio hooked up, visual hooked up.  And we will be with you for some tax time tips.

[PAUSE]

>>JODY:  ABLE Tax Time Tips will begin in one minute.

[PAUSE]

>>JODY:  All right.  Welcome to ABLE Tax Time Tips.  Before we get started, I want to give you a brief information about the ABLE National Resource Center.  The ABLE NRC is a leading comprehensive source of objective, independent information about Federal and state-related ABLE programs and activities, including guidance on the tax advantaged 529A or ABLE Savings Account.

Our mission is to educate, promote and support the positive impact ABLE can make on the lives of millions of Americans with disabilities and their families.

>>CHEYENNE:  We have some webinar logistics today.  I am Cheyenne, the Project Coordinator for ABLE Resource Center.  

The audio for today's meeting can be accessed by using computer audio or by calling in by phone.  If you select computer audio, please make sure that your speakers are turned on or your headphones are plugged in.

If you do not have sound capabilities on your coputer or prefer to listen by phone, dial:  1-929-205-6099, meeting code 893 6549 8470.

Technical Assistance.  If you have technical difficulties during the webinar, use the chat box to send a message to the NDI Host -- that's me -- or you may email info@ablenrc.org with the Subject Line: Webinar Help.

Please note: This webinar is being recorded and the materials will be placed on the ABLE National Resource Center website, along with all of our other ABLE webinars.

Captioning and ASL Interpretation.  Real-time captioning is provided.  The captions can be found by clicking on the closed captions icon in your Zoom controls at the bottom of the screen.  American Sign Language (ASL) Interpretation is provided.

NOTE: If you do not see the captions after clicking the button, or the ASL Interpreters on the screen, please alert the host via the chat box.

We invite to explore the ABLE National Resource Center website for answers to any questions in the FAQs, as well as reviewing our on demand webinars resource and newsletters at ablenrc.org.

>>JODY:  Hi, everyone.  If this is the first time you have joined ABLE NRC for a webinar, I want to welcome you.  For those of you who have attended our webinars in the past, I want to welcome you back.  It is great to have you online with us.

I want to introduce myself.  I am the facilitator for this session.  My name is Jody Ellis and I am the Director of ABLE National Resource Center.  I am joined today by two presenters.  My colleague, Laurie Schaller at NDI.  She is the manager of financial empowerment and she is extremely knowledgeable of all things ABLE.  And Don Dill, joins us.  He is a Senior Tax Analyst in the Wage and Investment Division of the IRS in Atlanta, Georgia.  He has worked for the IRS for over 35 years.  He has focused on the Volunteer Income Tax Assistance -- or VITA, as it is commonly referred to -- as well as tax counseling for the elderly pre-tax preparation programs.  Don has been a long time friend and partner for the National Disability Institute and for ABLE NRC.  

So Don, and Laurie, I want to thank you for joining us today.  And Don, we are looking forward to hearing your IRS wisdom.

Also we are joined today for this webinar -- we are supported by Cheyenne Rivers, who already introduced herself.  She is our production guru for today's webinar.  And we are also supported by Marlene Ulisky.  She is an ABLE subject matter expert here in the ABLE NRC.

I will give you a brief overview of ABLE.  The Stephen Beck Jr. Achieving a Better Life Experience (ABLE) Act proposed regulations were passed by Congress in 2014 and the current regulations were published 11/19/2020.  ABLE accounts fall under 529A of the Internal Revenue Service (IRS) tax code. 

In today’s webinar you will hear how you can increase your ABLE savings through filing a federal tax return to qualify for tax incentives.  So this session is all about the intersectionality between ABLE accounts and the IRS.

I want to share with you the objectives for the webinar.  We will be providing you with ABLE NRC resources.

We will be reviewing current and upcoming IRS tax related information related to ABLE.

We will cover who should file income taxes.

We will share tax incentives, credits, deductions and refunds.

We will spotlight some ABLE and tax scenarios as well as resources for the filing.

And we will be sharing best practices for ABLE account savings in 2024.

So we are going to get started with today's Tax Time Tips by talking about some new legislation.  So Don, I will now let you take it away.

>>DON:  Jody, thank you so much for that introduction.  And welcome to all who are participating.  Thank you for your time at this busy part of the year for everybody.

I want to take a minute off the top to thank my wonderful friends and partners at the ABLE NRC and National Disability Institute for inviting me to do this important session with them.  I want to thank them for all of the hard work they have down year over year to promote ABLE accounts, to increase the legislation and they have just done a wonderful job and are a tremendous resource.  So I highly recommend after this session that you look into all of the available resources they have available.

So a pleasure to be with you today.  I want to start our conversation talking about -- I don't like -- it is not relatively new, but it is a legislation that continues to give, if you will.  And so as we talk on the next slide, I want to introduce you to what we call SECURE Act 2.  To give you a little background, the initial part of it is the SECURE Act in 2019.  Like any good government agency, even Congress likes to have acronyms.  This is Setting Every Community Up for Retirement Enhancement Act -- thus SECURE.  

And in 2022 -- at the end of 2022, Congress passed another legislation, this one they called the SECURE 2.0 Retirement Savings Act.  You see it there.  It is just generally referred to as SECURE Act 2.0.  The beauty of this legislation is expandable on the initial SECURE Act of 2019 and provided further strengthening to retirement system and other options that you will see.  Come into play not only in this year, but in future years.  

Let me first just highlight two things on this slide.  First, see there on the SECURE Act 2.0 allowed for -- put into place provisions where 529 Plan rollovers can be made to ROTH IRAs when they meet certain requirements.

The example is this is a great option if somebody has medical improvements, but they are no longer disabled, so they need to move some of their ABLE account into type of ROTH IRS.  It gives that option.

The bigger one that we'll talk about is included what we refer to as the ABLE Age Adjustment Act.  As we move to the next slide, you will see more information there on the ABLE Age Adjustment Act.  

For those who might not remember, the initial ABLE Act was signed into law back in 2014.  The first attempt to to allow a person with a disability to save money without risking loss of their Federal disability benefits.  It was a wonderful act.  It still is.  At that time the provisions allowed for people to utilize ABLE accounts only until they were aged 26.  And obviously that was a significant limitation.  

Well the SECURE Act 2.0, in 2022, now has given the ability to expand that age eligibility up to the age of 46.  As you see on that second bullet there, that does not go into effect until January 1 of 2026.  But as you can imagine, expanding the age from 26 to 46 is going to allow millions of more people -- particularly veterans with disabilities -- the ability to open and save and invest funds in their future in ABLE accounts.  So we look forward to that expansion there in January of 2026.

I will move to the next slide.  The SECURE Act also provided, what I would like to say, an incentive for employers to help individuals with ABLE accounts by giving them a credit for monies they contribute to an employee's ABLE account.  Now as you see on the slide there, right now it is only for businesses with 50 or fewer employees.  But again, it is up to a $1,000 credit per employee when they contribute to their ABLE account.  So a wonderful opportunity there.  And then you see a little bit of a gradual decrease for those with employers with 51 to 100 employees.

But as a note for the ABLE beneficiary.  When they do -- when a employer does contribute on their behalf that money is treated as compensation.  Unfortunately, that may impact their benefits.  We'll take that into account as more employers learn about this option.

Again, the last bullet just to make sure that we know that earned income that is deposited into an ABLE account is still counted as earned income for ABLE account owners.

As I move to the next slide, one of the bigger pieces of the SECURE Act 2.0, that I am sure most of you have heard about, it increased the age for when individuals started having to take Required Minimum Distributions.  Or again, better known in the acronym world:  RMDs.  For those of you who remember, a few years back in 2019 that age was 60-1/2.  And now beginning, after last year, that was increased from 70 to 73.  You will see over the next few years the age will increase until by 2033, it will be aged 75.

So for those who have money in retirement accounts, the fact they do not have to take them out at an earlier age obviously allows them to earn more money and keep those funds invested well.

Just a reminder, as we are focusing here on ABLE accounts, there are no RMDs for ABLE accounts.  In addition, we always want to highlight -- as you will hear throughout this call -- opportunities to increase money into ABLE accounts and extra money that some individuals get from an RMD could be deposited into the ABLE accounts.

I will leave this over to Jody or Laurie and move over to the next section.

>>JODY:  Great.  Thank you so much, Don.  I will next ask Laurie Schaller to discuss current ABLE and IRS guidelines.

>>LAURIE:  To make sure that we are all on the same page, what is an ABLE account?  And who is eligible?  An ABLE account is a Section 5289A savings and investment account.  ABLE investments earnings are not taxable or countable as income account for that owner.  An ABLE account is owned by a person who has a Social Security number or a tax filing ID and has a disability or blindness that began before age 26.  And either the person has received SSI -- Social Security income -- or SSDI -- Social Security disability insurance before the age of 26.  If that is not the case, the person can ask their doctor to sign a disability certification indicating that that person's disability did begin before age 26.  

And these links will be live in the deck saved at the ABLE National Resource Center website.  Next.

So today there are 46 states that each have ABLE programs, plus the District of Columbia.  And people can choose from many of those ABLE plans.  If you are ABLE eligible, you can open one ABLE account in any state that has an ABLE plan that accepts outside residents.  You can use these comparison tools to compare the different ABLE plans.  You want to start with your own state of residence to see if there are specific advantages to selecting your own state's ABLE plan.

So we have updated our ABLE NRC program comparison tools that are available at the ABLE National Resource Center's site.  And each plan has shared their information so we can share it with you.

It talks about the availability of debit cards to help manage academic stows the ABLE funds.  So people can pay for qualified disability expenses easily from their ABLE account.  It mentioned proper titling of the ABLE account for owner and representative payees.  It talks about how funds can be used to pay for qualified disability expenses upon the death of ABLE account owner.  For example, ABLE account funds can be used to pay for funeral and burial expenses.  It talks about the increased contribution limits for this calendar year.  And some plans have increased their balance limits and reduced their maintenance fees that they charge each calendar year.  Next slide.

So we have new contribution limits for the ABLE accounts.  This year it is $18,000 from all combined sources within a calendar year.  And ABLE account owners who works and who does not have contributions made to a retirement plan for this calendar year may make additional contributions from their employment earnings or up to their employment earnings amount or whichever is less.  Either up to $14,580 or that person's employment earnings.  So if someone -- say owned $5,000 last year, they could contribute up to $13,540 into their ABLE account last calendar year.  So but they would have been restricted to only contributing that additional $5,000, because that was the amount of their earnings.  So an ABLE account owner wants to consider trying to earn as much as as possible so they can take advantage of this work support that allows them to contribute up to an additional $14,580, if they live in the Continental U.S.  And more if they live in Alaska or Hawaii.  So for this calendar year, that could be up to $32,580 for that ABLE account owner who lives in the Continental U.S.  Next slide.

The 529 college savings accounts.  The IRS has passed legislation allowing for a rollover into an ABLE account.  And this is approved to take place before January 1, 2026.  So families who have opened a 529 college savings account, they have the option that they can roll over up to $18,000 this calendar year into that ABLE account if other monies have not been contributed this calendar year to date.  And that is all tax free.  That roll over must occur within 60 days of with drawing the funds from the 529 college savings account.  529 college savings account.  And these roll overs are subject to the annual contribution limit of $18,000 when combined with all other contributions sources this calendar year.  Next slide.

So what this could mean for you.  If you have both an ABLE account and 529 college savings account, you may wish to consider a roll over.  ABLE qualified disability expenses allow for more expansive expenses than permitted by a 529-qualified tuition program.  And next slide.

Jody?

>>JODY:  Yes.  So Laurie is going to continue the discussion to provide information about who should file income taxes.  I know that there are a lot of questions about filing guidelines especially for those who earn wages under the required IRS amount.

So Laurie?

>>LAURIE:  Great.  Thanks, Jody.  We are starting with a statement.  

We know that the IRS tells people they earn a certain amount, they are required to file income taxes for that calendar year.  But that minimum income filing requirement may not be helpful to low income households or to people who have a disability.  A best practice is that a person who has a disability and works should file their income taxes regardless of the amount that they earned that previous calendar year.

Some people who have a disability and work may receive W2s and others may receive ten t nines.  Even though they may not consider themselves to be self-employed.

A person who has a disability who receives SSI and files income taxes and pays FICA, may eventually become eligible for SSDI and qualify for SSA Retirement and Medicare based upon their work history.

For 2024, each time a person earns $1,730 they have earned a quarter of coverage towards their SSDI/Retirement.

And we are allowed to accrue up to four quarters of coverage per calendar year.  For a young person to become eligible for SSDI, they only need six quarters of coverage.  So within a year-and-a-half, a youth who is working and files their income taxes could be eligible for SSDI benefits, which is not a means tested benefit program.  Instead of simply SSI.  Okay.  Next slide.  So filing a tax return is the only way to claim a tax credit or receive a tax refund for taxes already paid.  You could get future economic impact (stimulus) payments faster by filing.

If you file and are due a refund, you could use that money to pay any back taxes and/or SSA overpayments that you might owe.  This is a way to make sure your credit is the best it can be so that you can qualify for affordable credit when needed.

Tax filing reduces the risk of identity theft should someone else use your information to file a fraudulent return.  Okay.  And next slide.

>>JODY:  Now we are going to move into information about deductions, incentives and refunds.  We have heard about the importance of tax filing for people with disabilities.  And now let's hear from Laurie again.

>>LAURIE:  Thank you, Jody.

The IRS has information for people with disabilities and their ability to qualify for certain Federal tax deductions and income exclusions and tax credits.

Tax credits may be state or Federal.  And they reduce the income tax owed dollar for dollar and some may result in a refund.  All or a portion of the refund may be saved in an ABLE account.

Don?  Would you cover the next slide?

>>LAURIE:  To share, people who are still missing a stimulus payment for 2021, may go to recovery rebate credit to see if they are eligible.

A person who is eligible would need to file an amended income tax return for 2021 to receive this payment.Thank you Don.

>>DON:  I am back.  I was speaking to y'all on mute.  

I did want to just underscore the importance of the prior section on everybody filing tax returns.  Again, as Jody mentioned on the onset, I don't like to call it a "myth."  But there is a lot of discussion about whether you should file.  I thought the slides laid out an important case for always filing, from the importance of taking away any risk of identity theft, to ensuring that you get the credits and deductions -- and in the case of stimulus payments, that you are entitled to.  I highly recommend everybody re-energize themselves on making sure that they file tax returns each year.

Let me go to the next slide and talk about some of the important credits that individuals may find themselves eligible when they do file these tax returns.

So the first one here we are going to talk about:  The Child Tax Credit.  This is a credit that helps families with qualifying children get a significant tax break.

I wanted to preface, in each tax year the tax law changes.  So we are going to talk about some unique issues that we have with the Child Tax Credit.  Back, if you remember, during the pandemic, there were a number of bills passed, including the American Rescue Plan that changed some of the eligibility requirements for certain credits.  And it allowed people who didn't work in some years -- and 2021 being one of them -- to claim a credit, normally you had to have Earned Income Credit.  But so we wanted to remind those who might not have filed back in 2021 -- because during the pandemic they weren't able to work -- they should take a look and see if they were eligible for those expanded Child Tax Credits in 2021.  And if they have filed and didn't claim them, there is always the opportunity at this point to file an amended return.  

As just a brief reminder, an individual can file an amended return three years from the original due date of the return.  So when we are talking about 2021 tax returns, they were due April 15th of 2022.  So that gives you until April 15th of 2025 to file amended returns.  Very important.

And why we wanted to know that, back in those years the amount of the credit increased dramatically, as you see in the final note.  It moved up from 2,000 a year up to $3,600 per child.  Take a look back at the '21 and '22 and make sure that you took advantage of the special child credits for those years.  I will move to the next slide.

We wanted to talk about another credit that is important for individuals who work.  That is the Child and Dependent Care Tax Credit.  It is a tax credit that may help you pay for the care of eligible children and other dependents.  Like we call them in the tax arena:  "Qualifying persons."

Now normally when you talk about the Child Dependent Care Credit, that eligible child or dependent qualifying person has to be under the age of 13.  But when we are talk about an individual who is a person with a disability and, by definition in the tax arena says "incapable of self-care, lives with taxpayer for more than half a year," there is no age limit.  So all of the sudden that Child and Dependent Care Credit becomes much more eligible -- or more people become eligible.  And the credit itself is calculated based on your income.  And then a percentage of expenses that are incurred for the care of these qualifying persons that enable an individual to work, look for work or attend school.

And again, you may claim these credits even if you paid for these work-related expenses as a qualified disability expense from your own ABLE account.  So a very important credit.  Let me move down to the next slide.  

And I hope this is a credit that all of you are aware of.  If not, take time to become aware of it.  The Earned Income Tax Credit -- or known as "EITC" -- helps low- to moderate-income workers and families get a significant tax break in many situations.  If you qualify for the Earned Income Tax Credit, you can use this credit to reduce the tax you owe.  Or it can be refunded to you by increasing your refund.

In order to be eligible for the Earned Income Tax Credit, a person needs to have earned income from employment -- or self-employment, if they own their own business -- to be eligible.  And of course, as we noted in one of the prior sections, needs to file an income tax return in order to get the credit or the additional refund.  As we move to the next slide.  

Again, as I mentioned to you briefly in the Child and Tax Credit slide, there are also unique eligibility requirements for the Earned Income Tax Credit that were expanded in to 2021 and 2022 only by that SECURE Act.  As you note there, a person may have been eligible to claim -- or a person still is, I should say -- apologies -- eligible to claim those credits if they did not get the expanded credits in '21 or 2022 by filing an amended return for each of those years or filing if they have not previously filed.

The IRS offers on our website at irs.gov an EITC assistant to help people determine if they are eligible for Earned Income Tax Credit in all applicable years.

Note that a person does not have to have a child to qualify for the EITC.  What we are saying there an individual within certain income ranges and ages can also get a smaller Earned Income Tax Credit by applying and filing that tax return.  

And important in our conversation, an adult child who has a disability may qualify as a dependent child for EITC, regardless of their age if they are permanently and totally disabled for tax purposes.  Let me move to the next slide.  

To let you know how significant the EITC is, here are the amounts for this tax year for an individual that would file for the Earned Income Tax Credit in this year.  

For an individual with no qualifying children, they can earn up to $600.  

For a qualifying individual with one qualifying child, the maximum Earned Income Tax Credit could be up to $3,995.  

Individuals with two qualifying children, you see there:  $6,604.  

And for individual or family with three or more qualifying children, the amount maximum amount they may be eligible for is up to $7,430.  

So a very significant credit that we hope each and every one of you will take time to determine if you are eligible for.  So Laurie, I will throw it back to you for the next slide.

>>LAURIE:  Thanks, Don.  We understand that many individuals who have a disability are qualifying for Medicaid waiver programs.  And many children in the foster care programs may also have a disability.  So we wanted to include this new information in this presentation.

A person who receives SSI and/or SSDI or early retirement who is paid as a caregiver through a Medicaid Waiver Program or Qualified Foster Care program may need to file income taxes in order to receive EITC and Child Tax Credit, even though the payments may not be considered earned income by the IRS.

So this is a unique opportunity to qualify for the Earned Income Tax Credit and Child Tax Credit.  And though we want to make sure that people understand, if you yourself receive SSI and/or SSDI, and you are providing care to someone else through a home- and community-based waiver program, the earnings do need to be reported to the Social Security Administration.  And that may impact SSI, SSDI or early retirement benefits.  But for those who receive SSI and/or SSDI, you could also be eligible for work supports.  So you want to ask the Social Security Administration what work supports you may be eligible for, given this type of employment opportunity.

>>JODY:  Yes.  Now that we have learned that people with disabilities with low income should file taxes, even if they have earned wages under the required tax filing threshold for credit purposes.  Let's provide some helpful resources related to filing.

>>DON:  Thank you, Jody.  It is that time of the year for everybody.  Welcome or not, the tax filing season began January 29th, just last week.  So the IRS is now accepting and processing 2023 returns.

There is still an open opportunity to file amended returns for the three previous years -- 2020, 2021 and 2022 -- to capture missed stimulus payments, missed tax credits and/or deductions, and to record earned income from employment or self-employment to help, as Laurie told you about, with your Social Security employment history.

Now the filing deadline this year, for the first time in a few years, is back to its traditional day of April 15th, 2024.  For those who cannot get the filing done by April 15th, they can request a extension to tile.  It is not an extension to pay.  It is an extension to file your tax returns.  Those who request an extension will then have until October 15th, 2024.

And as we talked about, filing is important.  And I think everybody on this session with me would say that filing is not easy.  And in many times it is scary to individuals who don't have a lot of experience or expertise in filing their tax returns.  So we wanted to highlight to you two programs that are available to provide assistance to people who generally make around $60,000 or have a disability.

The first one is -- we refer to it as "VITA."  The Volunteer Income Tax Assistance (VITA).

To locate the nearest VITA site to you on IRS.gov.  There is the VITA Locator Tool.

To locate the nearest VITA or TCE site, use the VITA Locator Tool or call 800-906-9887.

Then we have a second program that is very similar, called Tax Counseling for the Elderly, or we refer to it as TCE.  And this is another free tax program.  It is eligible for people generally 60 and older.  Most are operated a by our AARP partners, by the AARP tax aide program.  To locate the nearest AARP TCE Tax-Aide site between January and April, use the AARP Site Locator Tool or call 888-227-7669. That is available on the AARP site.

And we also wanted to let you know about what we call a product that is what we prefer to as a "facilitated self-assistance."  This is a program where individual haves the capacity to use free software and get help through e-mail or chat or phone, where these other sites -- Volunteer Income Tax, VITA and TCE -- are usually face-to-face with an individual that helps to prepare the returns.  This facilitated, self-assisted site is called "My Free Taxes."  My Free Taxes is available to taxpayers with an Adjusted Gross Income (AGI) of less than $79,000.  And you can find find them at myfreetaxes.org.  Or call My Free Taxes at 866-698-9435 or visit their website for more information.  I will move to the next slide.

If those resources weren't enough, the IRS also has a platform for individuals to receive additional opportunities to file their taxes for free.  Our site is the IRS Free File.  It is an alliance of software providers that allows eligible taxpayers to self-prepare and file their federal income tax online for free, in one of two ways:  Guided, online tax preparation and filing at an IRS partner site is at no cost to qualifying taxpayers.

Again, as I mentioned with My Free Taxes, only taxpayers with adjusted gross income below 79,000 qualify for this free Federal tax return using the Free File service.

In addition, for those who are more comfortable completing the forms one by one, the Free File site also has Free File Fillable Forms, which are electronic Federal tax forms you fill out online.  This is again an option for taxpayers who are greater than 79,000 I should say.  Even if you are above 79,000, you can use the IRS Free File Fillable Forms.

And what we want to make sure that you are notice in the Free File there are several options to pick from in there.  And what we recommend is to study those options and make sure that the option you are selecting also provides you the opportunity to file your state level tax return for free.  I am moving to the next slide.  

And Jody, back to you.

>>JODY:  Great.  Thank you so much, Don.

So far in the webinar we provided important information.  We have talked about ABLE accounts and IRS guidelines.  Now what we want to do provide you with some examples of how these can be put into practice.  So we'll go over a few scenarios.

In the first scenario:

Juanita, a 30-year-old ABLE account owner who is not currently working.  Does Juanita need to file taxes because they have an ABLE account?

>>LAURIE:  Thank you, Jody.  So Juanita does not need to file taxes simply because they have an ABLE account. If a person hasn’t worked, but receives disability payments from Social Security Administration, or has retirement income, investment earnings, and/or dividends from non-ABLE accounts, or if their income is over IRS limits, they may need to file income taxes.  Even if a person is not required to file by law, they may choose to file a Federal income tax return to claim deductions or tax credits, and that may result in a refund.  

If a person decides to become employed to meet their goals and to save more money in an ABLE account, they should consider filing even if they are not required to file.  

So this is our ABLE Tax Time Tip:  File income taxes for 2023, even if you did not have “enough” earned income from employment to have to file.  This may help those who receive SSI or no disability benefit now, to eventually qualify for SSDI and retirement benefits in the future.

Okay.  Next.

>>JODY:  Let's move on to the second case scenario.

Bob receives Supplemental Security Income (SSI).  They have a job coach and have received 1099s at the end of each year for the last 5 years that they worked. Does Bob need to file income taxes?

>>LAURIE:  This is such a great question, Jody.  We are meeting many people who work maybe with a sheltered employment or an employment program that is designed specifically for individuals who have a disability.  And they are not getting W2s in some cases.  Sometimes they are getting 1099s.  And so in this instance, yes, anyone who is working in that type of program -- anyone who has a disability and does any type of employment and earned money should file income taxes.  And they may need to pay FICA taxes for each year that they worked.  But that helped to entitle them for other benefits, including retirement.

If Bob missed filing, they may file income taxes now for 2023, 2022, 2021 and 2020.  The same rule applies to a right to claim tax credits.  So they could get a tax refund for every one of those years.  That would be great.  Bob may either owe income taxes or receive a refund due to tax credits they may be eligible for.  Sometimes a tax refund can offset taxes that had been owed to the IRS. Bob should also contact SSA and report their earnings for each month.That they worked.  SSA can then record earnings for Bob for up to the last 3 years.

Filing income taxes for employment earnings, paying FICA and reporting earned income to SSA may qualify a person for SSDI, retirement and Medicare based upon their earned income. Next slide.

If Bob owes the IRS or SSA money, they may use ABLE funds to repay the IRS and SSA, or they could negotiate a repayment plan and use her earnings to repay the IRS and SSA.

So they may be repaid with ABLE account funds and these are examples of qualified disability expenses to repay the IRS or Social Security Administration.

Best practice:  Use income to repay the IRS, SSA and creditors to allow ABLE account investment funds to continue -- if you choose an investment option to grow tax free.  Remember, ABLE investment growth is not taxable income.  And it does not impact disability benefits.  

We have more information on this with our ABLE Decision Guide:  Determining whether something is a qualified disability expense.

>>JODY:  Thank you so much, Laurie.  Good information for sure.  We have one more scenario to share:

Manuel works part time and now qualifies for SSDI instead of SSI.   Manuel is wondering if they need to be claimed as a dependent on their parent’s income taxes?

>>LAURIE:  This is a great question, Jody.  We got a question about this today.  It depends.  Families all make this decision together, based upon several factors.

If Manuel is not a dependent, they may qualify for tax credits now that they work and deposit some of their employment earnings into their ABLE account.  Next slide.

Possible Tax Credits/Deductions would be:  

Filing a Disability Filing Credit.  

Perhaps they are eligible for the Earned Income Tax Credit (Federal and State).

Retirement Savings Contributions/Saver’s Credit.

Because maybe they deposited some of their employment earnings into their ABLE account.

And they may also be eligible for Student Loan Repayment Interest Deduction if they paid on one of their student loans last calendar year.

>>JODY:  Now it would be very helpful to hear about some best practices.  Laurie, if you could start that conversation.

>>LAURIE:  Thank you, Jody.

So maybe it is an opportunity, when filing taxes, to hold a meeting with those you choose from your family, friends, case managers and service providers.  Or maybe you call this group of people -- your "circle of support" -- to discuss a plan for maximizing your ABLE deposits this year and for future years as well.  Next slide.

So the Social Security Administration encourages SSI and SSDI recipients to work to their fullest ability.

There are SSI and SSDI work supports that can help a person to work and earn more while keeping their SSI, SSDI,Medicaid and/or Medicare. And people can learn more at ChooseWork.SSA.gov.

The IRS supports employment for people who have disabilities with the ABLE to Work Act Provision, allow more money to be deposited into an ABLE account because they work.  And their contribution can include monies from their employment income into their ABLE account.  Next slide.

So here at National Disability Institute, we have the American Dream Employment Network -- or ADEN -- which can help people who receive SSI/SSDI beneficiaries to work to their fullest abilities and use the SSA work supports that help a person earn and save more and keep benefits, including Medicaid and Medicare, sometimes indefinitely.  Keep those benefits even when works to their fullest ability.  That can be indefinitely.  Next slide.

So Best Practice: Spending ABLE funds on Qualified Disability Expenses (QDEs)  Deposit benefits into your checking account to pay for food, housing and monthly bills.  Then deposit any extra funds into your ABLE account.

A portion of earned income may be directly deposited into an ABLE account. Try to leave your deposits in your ABLE account to qualify for the maximum Saver’s Tax Credit.That you are eligible for.  Next slide.

Keep In Mind, for a person who receives a needs-based benefit like Supplemental Security Income (SSI) or Medicaid, federal tax refunds do not count as earned income. As a result, it does not impact eligibility for SSI or other federally funded benefits like Medicaid when a person gets an IRS refund.

Federal tax refunds do not count as a resource for a period of 12 months after the month of receipt, for SSI or any federally funded public benefit.

On the other hand, state tax refunds are not countable income the month received, but if held over to the next month, the funds are a countable resource. so a person who relies on means-tested benefits either needs to spend down state tax refunds, deposit them into a qualified 1st time home buyer program, a SSA approved PASS plan or deposit the funds into an ABLE account.  A PASS plan helps a person purchase what they need for their education or employment goal or deposit the funds into an ABLE account.  Next slide.

Great.  Thank you so much.

>>JODY:  Thank you so much, Laurie.  Now that we have provided you with resources related to filing taxes, I do want to share a few resources that we have in our library of material at ABLE NRC.

On the next slide you will see a QR code that you can use to download a one-page flyer.  And then in the event that you cannot use the QR code, I believe there has already been a link to this document in the chat.

The next slide, you are going to see a list of resources that we have available for free.  They are accessible to you 24/7.  We encourage you to visit us at ablenrc.org and browse through our material.  You could check our home page often for upcoming webinars.  And we encourage you to sign up for our achievable newsletter that is put out four time year.  It gives a lot of reliable and objective information about ABLE accounts.

On the next slide you will see a few tool kits that we have on our website.

On the next slide you will see, in addition to ABLE NRC, the National Disability Institute also has multiple resources that you might find helpful.  On this slide you will see -- you will have direct link to these websites.  But there is a Financial Resilience Center, Small Business HUB.  There is a NDI tax preparation and filing information for people with disabilities.  Assistive technology and lots of wonderful resources for you to access.

I want to end with thanking our presenters, don Dill and Laurie Schaller.  I have increased my knowledge today.  And I really want to thank all of you for spending a portion of your day with ABLE NRC.  

We look forward to having you come back for additional webinars in April of 2024.  And we will have some webinars in recognition of ABLE to Save Month.  We will have a webinar on ABLE to Save Opens the Door to Housing Opportunities.  And we will have ABLE to Save for Lifelong Financial Wellness, where we highlight the flexibility of using ABLE accounts throughout the life span.

Until then, stay engaged, visit our website, follow us on social media.  We are on LinkedIn, Facebook, Threadz and Instagram.  

So thank you so much and have a great rest of your day.

[END WEBINAR]