Frequently Asked Questions
Scroll down to see answers to things we get asked a lot. If you're looking for something specific, enter or choose a keyword below.
- About ABLE
- ALR
- Benefits
- Contributions
- Eligibility
- General
- Gifting
- How the account works
- Linking bank accounts
- Opening an account
- Qualified expenses
- Successors and Estates
- Tax benefits
- What is the maximum annual contribution?
- The total annual contributions by you, family and/or friends for calendar year 2024 are $18,000. This limit is tied to the federal gift tax exclusion. In future years, the IRS may change the annual amount that can be excluded from federal gift taxes, so you should consult with your tax advisor for... Read more
- Do I have to pay taxes on my account?
- As long as the money in your Maryland ABLE account is used for eligible expenses, it won’t be counted as income for your state or federal taxes. If a purchase doesn’t qualify as an eligible expense, you’ll have to pay taxes and a 10% penalty on the earned portion of the money withdrawn. If you... Read more
- What are the tax laws that govern ABLE accounts?
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The ABLE Act was modeled after the 529 college savings tax code. The ABLE Act adds ABLE Accounts under Section 529A of the IRS tax code.
- Who qualifies for an income deduction on their State taxes?
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Maryland offers up to a $2,500 income subtraction per contributor, per beneficiary, on your Maryland State tax return.
- Are there any Federal tax deductions for ABLE contributions?
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No, the Federal tax benefit is the fact that the account grows tax free, eliminating the need to pay capital gains on the money accruing in your account.
- Can out-of-state contributors receive tax deductions?
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Some states offer parity, meaning that the contributor’s state of residence may offer a state deduction for putting money into another state’s plan. It would be dependent upon each state’s individual program.
- How do I prove an eligible expense?
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We don’t need proof of your expenses, but you should have it for your records as the IRS may require you to provide proof of qualified disability expenses in the case of an audit.
- What is IRS Form 1099-QA?
- If you make a withdrawal from your account, you will receive the IRS Form 1099-QA, which is a tax form that details all of the withdrawals you made throughout the tax year from your account. This statement reports withdrawals from the ABLE account in the prior calendar year. You only receive a... Read more
- When is IRS form 1099-QA available?
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The plan administrator must send the 1099-QA by January 31, so you should receive the form no later than early February following the close of the tax year. You will receive it via mail or electronic delivery based on communications preferences.
- What is IRS Form 5498-QA?
- If you make a contribution to your account, you will receive IRS Form 5498-QA, which is a tax form that details all of the contributions you made throughout the tax year to your account. This form reports ABLE account contributions, rollovers and direct program-to-program transfers in the prior... Read more
