You’ll have to pay taxes on any non-eligible expense, plus a 10% penalty on the earnings portion of the withdrawal. A withdrawal used for a non-eligible expense could affect your eligibility for SSI benefits, Medicaid or other much needed benefits under federal or state programs, as could a withdrawal that is applied to a housing expense in any month after the month of the withdrawal.
Keep your receipts and documentation for all eligible expenses in case the IRS wants to see them. We don’t need proof of your expenses, but you should have it for your records. If you use the prepaid card for eligible expenses, you’ll be able to track your purchases through the system to help with your records, but the IRS will require you also have receipts.
You can use money from an ABLE account for housing expenses. If you’re eligible for SSI, the money must be used within the month it was withdrawn so it doesn’t affect your SSI eligibility. Plus, having an ABLE account doesn’t affect other housing benefits, like Section 8.
There’s a wide range of eligible expenses that cover most costs associated with living with a disability. Some of these include: living expenses, education, housing, transportation, employment, vacation, job training, career support, assistive technology, personal support services, health, prevention, wellness, financial management, administrative services, legal fees, funeral costs, burial expenses and more. As long as the expense helps maintain or improve the health, independence, or quality of life of the person living with a disability, it can qualify as an eligible expense.
You can withdraw money from the account and use it for eligible expenses which cover most costs associated with living with a disability. See the approved categories for more details about eligible expenses. Another option is to use the prepaid card, which can be loaded with funds from your account and used for eligible expenses.