Form 1099-QA, Distributions From ABLE Accounts

The IRS tax Form 1099-QA is used to report information about the distributions from the saving accounts of special-needs individuals, through their accounts that are been created through the ABLE (Achieving a Better Life Experience) Act. The Internal Revenue Service states that any agency that has established and maintains a qualified ABLE program, should file this Form with the IRS, every time it makes any distributions for each ABLE account or when it terminates them. 

What are ABLE accounts?

The ABLE accounts are intended to allow savings with tax advantage for the future expenses of individuals with special needs. It is possible to make annual contributions up to $15,000 to an ABLE account, which is also the federal maximum for gift taxes. No federal tax deductions are offered for the contributions, and the qualifying distributions are made tax-free, just like the state-sponsored education saving accounts IRC Section 529. Certain 529 plans can also be rolled over to the ABLE accounts.

Due dates to file Form 1099- QA:

Any agency that establishes and maintains a qualified ABLE program should file Form 1099-QA with the IRS on or before March 1st, 2023 for each of the ABLE accounts from which any distributions were made or were terminated during 2022.  

What information is offered by Form 1099 QA?

The tax Form 1099- QA offers the taxpayers TIN, their account number, and their SSN. The step-by-step split up of this tax Form is as follows.

Box 1: Shows the gross distribution paid to the taxpayer for the tax year. The gross distributions will include the distributions from the ABLE accounts meant for both qualified and non-qualified disability expenses. 

Box 2: Shows the earning part of the gross distributions that are listed in Box 1. Generally, the amounts distributed and are used to pay for the qualified disability expenses and are rolled over to another ABLE account within 60 days are not to be included in the income. The taxable income shall be reported as other income on Form 1040. 

Box 3: This shows the basis of the gross distributions reported in Box 1.

Box 4: Check the box if any program to program transfer was made from one ABLE account to another.

Box 5: Check the box if the ABLE account was terminated in the previous tax year

Box 6: If this box is checked, then the taxpayer is not the designated beneficiary of the ABLE account, and may be subjected to additional taxes or penalties on the gross distribution, reported on Box 1. 

The Tax Form 1099-QA from the IRS is used to report the contributions made towards ABLE accounts under the IRC 529 A act. Any state or agency that establishes and maintains a qualified ABLE program should file Form 1099-QA for each able account that is maintained with the IRS. The best way to file this Form within the deadline, to avoid penalties and errors is to e-file them with a credible tax-filing partner like Tax2efile.