In a previous article, we reported on a new federal law that allowed states to create “Achieving a Better Life Experience” (ABLE) accounts, which are tax‑free accounts that can be used to save for disability‑related expenses. We are pleased to report that on July 12, 2015, Governor Scott Walker signed Wisconsin Act 55 into law which created an ABLE program for Wisconsin that is effective for tax years beginning on or after January 1, 2015.
The good news for Wisconsin residents is that amounts deposited into a Wisconsin ABLE account are deductible for Wisconsin income tax purposes, although they are not deductible for federal income tax purposes. However, the maximum total amount of ALL contributions to a Wisconsin ABLE account during a year for a particular beneficiary is limited to the federal gift tax exclusion amount for the year (i.e., $14,000 for 2015). Earnings in a Wisconsin ABLE account grow both federal and state tax‑free when used for “qualified expenses.” “Qualified expenses” are any expenses related to the account beneficiary’s blindness or disability and include education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and other expenses approved by the IRS under the regulations it adopts for the ABLE program.
This article only provides a brief look at Wisconsin’s new ABLE account program. If you or a loved one is blind or disabled, you should consult with your own legal and/or financial advisors to see if an ABLE account is appropriate for your family.
If you have any questions about how the information in this article may affect you or your business, please contact Carolyn Hegge at chegge@stroudlaw.com or (608) 257‑2281 or your Stroud attorney.
DISCLAIMER: The information in this article is provided for general informational purposes only, is not necessarily updated to account for changes in the law, and should not be considered tax or legal advice. This article is not intended to create, nor does the receipt of it constitute, an attorney-client relationship. You should consult with your own legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.