Question

Are ABLE account distributions for QDE considered nontaxable income received by the person for their own support?

Forum|Forum|3 years ago
February 8, 2023
1 reply
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Worksheet 2 in Publication 501 provides guidance on determining support. For Line 1 of the worksheet - the total funds belonging to the person, including income received (taxable and nontaxable) is entered.

It is clear that distributions from an ABLE account for Qualified Disability Expenses (QDE) are not considered taxable income.

However, are these distributions considered nontaxable income that would be included on Line 1 of Worksheet 2?

PatriciaV

Employee

Yes, ABLE distributions should be included on Worksheet 2 Line 1 as part of the total income received by the individual. However, the total amount of these funds used for QDE should also be included on Line 2 (Support).

Note that the distributions are taxable but are not subject to tax if the proceeds are used for the beneficiary's support. This distinction does not technically make the distributions non-taxable income.

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