In this issue:
  • Tax Corner: ABLE Accounts
  • Client FAQs: Social Security and Augusta Rule
  • Tax Facts: Audits
  • New CPA Clients
  • Check This Out
  • Important Tax Dates
Whew! That was fast.
Summer seems like it just started, doesn’t it? But kids are about to head back to school and our shortened summer work schedule is nearing its end (on August 19th!). Thankfully, our staff has enjoyed their well-deserved Fridays off and managed to fit in some vacation time.
Ed and I checked a “bucket list” trip off our list this summer and spent time exploring Sedona and the Grand Canyon. We went on some incredible hikes and will definitely be returning at some point! Anais and Ryan also had a fabulous time (on a separate trip!) visiting Las Vegas, Hoover Dam, Sedona, and the Grand Canyon. (See the pictures below!)
Now we’re turning our attention back to tax returns! Our firm generally has about 50% of returns on extension, and we’re diligently working to get them completed well before the September and October deadlines.
As always, please let us know if you have any questions about your accounts and if there’s anything we can do for you as we move through the 3rd quarter!
Susan Clarke & The CPA Team
Tax Corner:
ABLE Accounts for individuals with disabilities
Eligible individuals with disabilities and their families can contribute to an ABLE Account – a tax-advantaged savings account that can fund disability expenses.
This type of account was created in 2014 as a result of the passage of the Stephen Beck Jr. Achieving a Better Life Experience Act (ABLE Act). Millions of individuals with disabilities rely on public funds and programs for income, health care, food, and housing assistance. In order to qualify for programs such as SSI, SNAP, and Medicaid, individuals must have less than $2,000 in liquid resources. Any increase in resources could cause individuals to become ineligible for these vital assistance programs.
But since the ABLE Act was passed, eligible individuals and their families are allowed to establish ABLE savings accounts that should not affect their eligibility for SSI, Medicaid, and means-tested programs such as FAFSA, HUD, and SNAP/food stamp benefits.
The legislation explains that funding a private ABLE savings account will “supplement, but not supplant, benefits provided through private insurance, Medicaid, SSI, the beneficiary’s employment and other sources.”
Here are a few important details:
  • Eligibility is restricted to individuals whose onset of disability was before turning 26 years of age.
  • The beneficiary of the account is the account owner, and income earned by the accounts will not be taxed.
  • Contributions to the account can be made by any person (the account beneficiary, family, friends, Special Needs Trust, or Pooled Trust), but must be made using post-tax dollars.
  • Contributions will not be deductible on federal tax returns, but some states may allow state income tax deductions.
  • The total annual contributions by all participating individuals, including family and friends, for a single tax year, is $16,000.
  • Total allowable ABLE savings vary by state and range from $235,000 to $550,000.
  • For individuals with disabilities who are recipients of SSI, the first $100,000 in ABLE accounts would be exempted from the $2,000 individual resource limit, but when the account balance combined with other resources exceeds $100,000 by the SSI resource limit, the beneficiary’s SSI cash benefit would be suspended.
  • ABLE account owners who work, but do not contribute to an employer-sponsored retirement account might be eligible to save an additional amount.
Client FAQs
I’m under 40 – will I even have Social Security benefits when it’s my turn to retire?
Actually, yes. The Social Security program is often misunderstood. It’s important to realize that when you (and your employer) pay into the system, you are getting a very basic level of retirement, disability, and medical coverage in addition to life insurance/death benefits for your spouse and kids. It’s a huge return on investment.
Furthermore, the Social Security program is solvent through the mid-2030s and even if nothing changes in policy, it has enough to keep paying 80% of benefits “for as long as can be predicted actuarially.”
So more than likely, it will be around for you when you’re ready to retire!
Can I rent my rent out my home, second home, or vacation home without claiming it as income on my taxes?
Yes. But only if you are using the property/dwelling unit as a residence and you rent it out for fewer than 15 days! This exception is thanks to the Augusta Rule and pertains to “Minimal Rental Use.” In this case, you don’t have to report any of the rental income, but the flip side is that you can’t deduct any expenses as rental expenses.


Say Hello to CPA’s New Client
Marianna Swallow – A Simple Approach to Public Speaking – Marianna and her team help people get more comfortable speaking in front of groups through training, coaching, and confidence-building. She’s helped more than 25,000 professionals over a 21-year career.
Interesting Reads
Important Tax Dates & Deadlines
September 15, 2022
3rd quarter 2022 Estimated Tax Payment Due
October 17, 2022
Extended Individual Tax Returns Due
December 15, 2022
C-corp Estimated Tax Payment Due
IL Entity Estimated Tax Payment Due
January 16, 2023
4th quarter 2022 Estimated Tax Payment Due
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