ABLEnow customers may be eligible for a tax credit just for making contributions to their ABLE account.
Under the 2017 Tax Cuts and Jobs Act, certain designated beneficiaries of ABLE accounts became eligible for the Retirement Savings Contributions Credit (known as the “Saver’s Credit”).
Designed to help low- and moderate-income Americans, the Saver’s Credit can be applied to up to $2,000 in ABLE contributions for eligible individuals. The credit can be claimed on IRS Form 880 by individuals who meet the following three requirements:
- Are at least 18 years old at the close of the taxable year;
- Are not a dependent or full-time student; and
- In 2019, have an adjusted gross income of:
- $64,000 or less as a married joint filer
- $48,000 or less as a head of household filer
- $32,000 or less as any other filing status
Most tax-preparation software programs will determine eligibility, complete the appropriate forms and apply the savings automatically. Individuals who are eligible to claim the Saver’s Credit may qualify for the IRS Free File program, which offers free online tax software.
The Saver’s Credit is a permanent addition to the U.S. tax code, so ABLEnow customers who are unable to take advantage of the credit may want to consult a trusted tax professional for recommendations on maximizing the federal and state tax benefits of an ABLE account.