Planning for the Future Using MO 529 Accounts
Last year, Missouri became the 20th state to offer citizens with disabilities a chance to save money for disability-related expenses without jeopardizing their eligibility for Social Security and Medicaid. Recently, the Senate modified the program so we can give those families with an individual with disabilities even more flexibility to make financially sound decisions.
MO ABLE (Achieving a Better Life Experience) is a savings account program for families of individuals with disabilities. Missouri families who contribute to MO ABLE accounts are eligible for a tax deduction of up to $8,000 or $16,000 if married and filing jointly. The earnings are not subject to federal income tax as long as funds are spent on qualified disability expenses.
Recent changes to the federal tax code have opened up other opportunities for families with 529 plans, which include MO ABLE and educational savings accounts. Senate Bill 882 modifies the Missouri Higher Education Savings Program to allow Missouri 529 account holders to transfer money from their personal bank account to a Missouri ABLE account without a tax penalty. This modification reflects the changes to the federal tax code that permits transfers from 529 and ABLE accounts without the penalty.
MO ABLE accounts have the ability to change people’s lives. Individuals with disabilities deserve to have a high quality of life and one where they can plan for years ahead. Having a secure financial future is part of that picture. By allowing the transfer without the tax penalty, a family who receives an unexpected diagnosis that changes their life plan has financial options and greater financial flexibility. Senate Bill 882 will give families the opportunity to make more financially sound decisions about the future if an unforeseen medical diagnosis arises.
Helping Women with Unplanned or Crisis Pregnancies
The Senate has also approved a measure that will reauthorize the Pregnancy Resource Center Tax Credit for another six years. Pregnancy resource centers play an important role in providing valuable services to pregnant women and children in Missouri. They are tax-exempt facilities that assist women with unplanned or crisis pregnancies and encourage women to carry their pregnancies to term. They can offer pregnancy testing and prenatal vitamins as well as counseling and direct client services all free-of-cost to the client.
Senate Bill 632 modifies several tax incentives for contributions made to certain benevolent organizations including the Pregnancy Resource Center Tax Credit. The tax credit allows Missouri taxpayers who donate to a pregnancy resource center to qualify for a state tax incentive. This bill will increase that incentive cap to $3.5 million beginning in July of 2019. Senate Bill 632 also extends the tax credit and increases the cap for maternity homes, which provide housing for pregnant minors at no cost. The tax incentives allow these centers to extend and increase their services to pregnant women, children and unborn children in the Show-Me State.
Thank you for reading this weekly column. Please contact my office at (573) 751-3678 if you have any questions.