Other Income: Taxable Distributions from an ABLE Account (1099-QA)
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The Achieving a Better Life Experience (ABLE) Act of 2014 allows states to create tax-advantaged savings programs for eligible people with disabilities (designated beneficiaries). Funds from these 529A ABLE accounts can help designated beneficiaries pay for qualified disability expenses.
Distributions are tax-free if used for qualified disability expenses. These expenses include housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology and personal support services.
Box 2 shows the earnings part of the gross distribution shown in box 1. If any amount was used for nonqualified expenses, report that amount as “Other income” on Schedule 1 (Form 1040).
Additional Information:
IRS Publication 907 - Tax Highlights for Persons With Disabilities
IRS: ABLE accounts - Tax benefit for people with disabilities