ABLE accounts allow people with disabilities to save money and protect their rights to public benefits. An ABLE account is open to the account owner, their friends and family, as well as any other person (trusts included) who can make contributions. You can either keep the money tax-free or use it for eligible expenses.
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Qualified disability expenses (QDEs), which are eligible expenses for ABLE, cover a wide range of items. Sometimes it is simple to determine if an expense is a QDE. In other cases, it can be more complicated. This guide will help you navigate that process.
Understanding Qualified Disability Expenses
Section 529A (e)(5) of ABLE Act, 26 U.S. Code 539.A(e),(5), outlines the official rules for ABLE accounts. Although the act states that your ABLE account can be used for qualified disability expenses, it does not include a comprehensive list of QDEs. The law instead lists expenses that could be considered QDEs.
These include but aren’t limited to:
- Support and training for employment
- Assistive technology, personal support services
- Prevention and Wellness
- Administrative and financial services
- ABLE account monitoring and oversight expenses
- Legal fees
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Funeral and burial
Other expenses approved by the U.S. Treasury Department/IRS regulations. Proposed regulations added basic living expenses to this listing in 2015.3
Juliana Crist is a senior consultant at AKF Consulting. She advises state-run municipal plans. “There is not a complete list of QDEs. But the category is very wide.” Because the law does not specify every expense you can use your ABLE account to pay. The IRS makes the final decision about what is permissible. Sometimes the Social Security Administration (SSA), or the IRS, will issue guidance to clarify whether certain items are QDEs. For example, as of 2022, the SSA confirmed that food is a QDE.
What qualifies as an eligible expense?
QDEs are defined in the guidance. It states that expenses can be used for any reason.
To determine if a particular expense is a QDE, first check the above list. If the expense falls into one of these categories, it is a QDE.
There are some expenses that you might not be sure of. The ABLE National Resource Center has a list of guides that can help you. The guides include information on a wide range of expenses.
- Rent and mortgage payments
- Assistive technology (AT)
- Purchase of vehicle
- Supply for COVID-19
- All day expenses, including food
- Managing your ABLE account
- Tips for Using Your ABLE account
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There are some key points to remember when working with your ABLE account.
It doesn’t have to be related with a disability if an expense fits within a QDE category. Housing expenses, such as rent, mortgage, utilities, trash pickup, and real estate taxes, are not required to be connected to a disability.
You can use non-ABLE money to pay for items you aren’t sure of and keep your ABLE money for those things that are covered. For example, you could use your ABLE money for rent payment. This would allow you to free up non-ABLE funds for other expenses.
Wherever possible, use public funds. Medicaid might be able pay transportation costs to a doctor, special education programs, or specially adapted computer equipment. Public benefits should be used if they can pay for it. ABLE funds can also be used to cover things public benefits cannot.
Keep records of any expense you are uncertain about. The IRS will most likely contact you if you use your ABLE account to pay for a non-eligible expense. It is important to be prepared to explain the reason you believe a certain expense was a QDE. If you keep records, it will be much easier.
Can I use my ABLE account to rent?
Yes. Yes. You can use money from your ABLE account to pay for housing expenses. To be eligible for Supplemental Security income (SSI), you must use the money within one month of when it was withdrawn to ensure that it does not affect your SSI eligibility. A ABLE account does not affect Section 8.9 housing benefits.
Can an ABLE account be used for food?
Yes. An ABLE account can be used to pay for groceries, food delivery and restaurant meals. Recent SSA confirmations that food is a QDE.
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Can an ABLE account be used for a vacation?
Yes. Yes. A vacation is eligible as long as it helps maintain or improve the quality of life, independence, and health of the person with a disability.