The Tax Increase Prevention Act of 2014 that was signed last December mainly affected the year 2014 as it extended for that year only some 50 tax breaks that had expired earlier. One provision, however, became effective in 2015. Starting this year, the law authorizes tax-favored ABLE accounts for disabled individuals. These “Achieving a Better Life Experience” accounts are exempt from income tax when the funds are used to pay for qualified expenses such as transportation, housing, education, and medical costs. Nonqualified distributions are subject to income tax, plus a 10% penalty. If you would like details about ABLE accounts, contact our office.
The IRS announces that, as part of its efforts to curb fraud and identity theft, it will no longer directly deposit more than three electronic refunds to a single financial account or prepaid debit card. Taxpayers who exceed the limit will receive an IRS notice and a paper refund.
The IRS also warns that direct deposit must be made only to accounts bearing the taxpayer’s name.