2023 Indiana Code › Title 6. Taxation › Article 3. State Income Taxes › Chapter 3. Credits › 6-3-3-12.1. Credit for Contributions to Able Account; Date of Contribution; Repayment of Credit After Nonqualified Withdrawals

Effective 1-1-2024.
Sec. 12.1. (a) As used in this section, "ABLE account" has the meaning set forth in IC 12-11-14-1.
(b) As used in this section, "contribution" means the amount of money directly provided to an Indiana ABLE 529A savings plan account by a taxpayer. A contribution does not include any of the following:
(1) Money credited to an ABLE account as a result of bonus points or other forms of consideration earned by the taxpayer that result in a transfer of money to the ABLE account.
(2) Money transferred from any qualified ABLE program under Section 529A of the Internal Revenue Code or from any other similar plan.
(3) Money transferred from any qualified tuition program under Section 529 of the Internal Revenue Code or from any other similar plan.
(c) As used in this section, "designated beneficiary" has the meaning set forth in IC 12-11-14-5.
(d) As used in this section, "Indiana ABLE 529A savings plan" refers to the Achieving a Better Life Experience (ABLE) 529A plan established under IC 12-11.
(e) As used in this section, "nonqualified withdrawal" means a withdrawal or distribution from an Indiana ABLE 529A savings plan that is not a qualified withdrawal.
(f) As used in this section, "qualified disability expense" has the meaning set forth in IC 12-11-14-8.
(g) As used in this section, "qualified withdrawal" means a withdrawal or distribution from an Indiana ABLE 529A savings plan that is made:
(1) to pay for qualified disability expenses, excluding any withdrawals or distributions used to pay for qualified disability expenses, if the withdrawals or distributions are made from an Indiana ABLE 529A savings plan that is terminated within twelve (12) months after the ABLE account is opened;
(2) as a result of the death of a designated beneficiary; or
(3) by an Indiana ABLE 529A savings plan as the result of a transfer of funds by an Indiana ABLE 529A savings plan from one (1) third party custodian to another.
A qualified withdrawal does not include a rollover distribution or transfer of assets from an Indiana ABLE 529A savings plan to any other qualified ABLE program under Section 529A of the Internal Revenue Code, or to any qualified tuition program under Section 529 of the Internal Revenue Code other than a college choice 529 education savings plan established under IC 21-9, or to any other similar plan.
(h) As used in this section, "taxpayer" means:
(1) an individual filing a single return;
(2) a married couple filing a joint return; or
(3) a married individual filing a separate return.
(i) A taxpayer is entitled to a credit against the taxpayer's adjusted gross income tax imposed by IC 6-3-1 through IC 6-3-7 for a taxable year equal to the least of the following:
(1) Twenty percent (20%) of the amount of the total contributions made by the taxpayer to an ABLE account or accounts of an Indiana ABLE 529A savings plan during the taxable year.
(2) Five hundred dollars ($500).
(3) The amount of the taxpayer's adjusted gross income tax imposed by IC 6-3-1 through IC 6-3-7 for the taxable year, reduced by the sum of all credits (as determined without regard to this section) allowed by IC 6-3-1 through IC 6-3-7.
(j) A taxpayer is not entitled to a carryback, carryover, or refund of an unused credit.
(k) A taxpayer may not sell, assign, convey, or otherwise transfer the tax credit provided by this section.
(l) To receive the credit provided by this section, a taxpayer must claim the credit on the taxpayer's annual state tax return or returns in the manner prescribed by the department. The taxpayer shall submit to the department all information that the department determines is necessary for the calculation of the credit provided by this section.
(m) An owner of an ABLE account of an Indiana ABLE 529A savings plan must repay all or a part of the credit in a taxable year in which any nonqualified withdrawal is made from the ABLE account. The amount the taxpayer must repay is equal to the lesser of:
(1) twenty percent (20%) of the total amount of nonqualified withdrawals made during the taxable year from the ABLE account; or
(2) the excess of:
(A) the cumulative amount of all credits provided by this section that are claimed by any taxpayer with respect to the taxpayer's contributions to the ABLE account for all prior taxable years; over
(B) the cumulative amount of repayments paid by the owner of the ABLE account under this subsection for all prior taxable years.
(n) Any required repayment under subsection (m) must be reported by the owner of the ABLE account on the owner's annual state income tax return for any taxable year in which a nonqualified withdrawal is made.
(o) A nonresident owner of an ABLE account who is not required to file an annual income tax return for a taxable year in which a nonqualified withdrawal is made shall make any required repayment on the form required under IC 6-3-4-1(2). If the nonresident owner of the ABLE account does not make the required repayment, the department shall issue a demand notice in accordance with IC 6-8.1-5-1.
(p) The executive director of the Indiana ABLE authority shall submit or cause to be submitted to the department a copy of all information returns or statements issued to ABLE account owners, designated beneficiaries, and other taxpayers for each taxable year with respect to:
(1) nonqualified withdrawals made from ABLE accounts for the taxable year; or
(2) ABLE account closings for the taxable year.
(q) The following apply to contributions made after December 31, 2023:
(1) For purposes of this section, all or part of a contribution made after the end of a taxable year, and not later than the due date of the taxpayer's adjusted gross income tax return for the taxable year under this article (as determined without regard to any allowable extensions), shall be considered as having been made during the taxable year preceding the contribution if:
(A) the taxpayer elects to treat all or part of a contribution as occurring in the taxable year preceding the contribution;
(B) the taxpayer designates the amounts of the contribution to be treated as occurring in each taxable year, in the case of a single contribution that is to be allowable under this section in two (2) separate years; and
(C) the taxpayer irrevocably waives the right to claim the contribution claimed in the taxable year preceding the contribution as occurring in the taxable year of the contribution.
(2) An irrevocable election under this subsection must be made in writing at the time the contribution is made.
(3) The Indiana ABLE authority may prescribe any forms necessary for purposes of this subsection.
As added by P.L.122-2022, SEC.2. Amended by P.L.11-2023, SEC.25; P.L.236-2023, SEC.66.