Able Account

Forum|Forum|3 years ago
May 13, 2023
2 replies
5 views

Taxpayer has some sort of settlement. Normally only has SS

1099-misc for $16,000 line 3 other income.

Are there any write offs that can be used for the settlement? Taxpayer and relative keep referring to it as an "able account"

Thank you

ProSeries Professional

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IRonMaN

Level 15

able account - Google Search

Slava Ukraini!

qbteachmt

Level 15

"Taxpayer has some sort of settlement."

You would have two items, if this happened in that year:

1. Settlement

For settlements, very little is a write off, so you have to research what type of settlement it is, and what is provided for in the tax code.

2. How the money was handled

"1099-misc for $16,000 line 3 other income."

But an ABLE uses 1099-QA and 5498-QA.

For ABLE accounts, that just means this got established for purposes, going forward, to provide for this person's needs. Think of it as similar to a life HSA account (tax sheltered, qualified expenses).

So, perhaps what you see is some sort of settlement payout, which is not in any specific account. And then perhaps someone used it to establish an ABLE account. In which case, yes, there is a benefit for contributing to an ABLE account, and notice that is the same as the gift limit for the year.

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