On June 1, 2016, Ohio became the first state in the nation to open its ABLE account program. This news is making national headlines because individuals from any state–including Connecticut–can go on-line and create an Ohio ABLE account that will be valid in the individual’s home state. What are ABLE accounts?
Since each state is responsible for establishing and maintaining this particular type of savings program, each state is also responsible for enacting legislation with regards to ABLE accounts. On December 22, 2015 New York passed Senate Bill No. 4472 which allows annual contributions up to $14,000 made by a NY Able account owner into an eligible NY Able account. This law went into effect on April 1, 2016 and any qualifying contribution will be allowed as a deduction against the taxpayer’s federal taxable income which is subject to New York State income tax. Similarly, any distributions from a NY ABLE account that are used toward qualified expenses may also be subtracted from the taxpayer’s federal taxable income to the extent that they were in included in gross income for federal income tax purposes. It is important to note that distributions from a NY ABLE account that are used toward non-qualified expenses are to be added to the taxpayer’s federal taxable income.
Read more at Wilken & Gutterplan, P.C.: