(303) 499-7445 info@tandemcpas.com

Year-end Reminders

529 Plan Conversion, ABLE, and Health Insurance

  1. Colorado ABLE Accounts – These accounts can be set up for children and young adults with disabilities to assist them without affecting their ability to qualify for certain types of government assistance.
  • Up to $17,000 can be contributed in 2023 and 2024. ABLE account owners who earn income may exceed the annual $17,000 contribution limit. The additional annual contribution amount allowed is equal to the federal poverty level for a one-person household (in your state of residence) or the account owner’s gross wages, whichever is less.  There may be additional restrictions or requirements; please see https://www.coloradoable.org/ for more information.
  • For 2023 through 2025, donations to a Colorado ABLE account will qualify for a Colorado tax deduction similar to the deduction for Colorado College Savings Accounts.
  1. 529 Plan Conversion to Roth – Beginning in 2024, unused 529 plan funds held in accounts for 15+ years may be rolled into a newly created Roth IRA account for the same beneficiary. Contributions and associated earnings made into the 529 account within 5 years of rollover date may not be transferred into the Roth.  Rollovers are subject to the annual Roth IRA contribution limits including earned income limitation. Lifetime maximum for rollover is $35,000.
  1. Health Insurance for 2024 – If you do not have health insurance from your employer or Medicare, we suggest investigating coverage on the exchange at https://connectforhealthco.com/. The more generous provisions of 2022 have been extended through 2025. Out-of-pocket insurance costs are capped at 8.5% of household income (and the percentage can be lower).
  1. Health Insurance Tax Credits – If you received your health insurance in 2023 through a health care exchange (such as https://connectforhealthco.com/), you may have received an advance tax credit to help pay for the premiums. When we prepare your taxes, the advance tax credit will be compared to the final credit allowed based on your actual 2023 income, which can be quite different than the amount used to estimate the premium credit allowed.
  • If your income in 2023 is higher than the amount provided when you signed up, you will need to pay back part or all of the credit. This amount can be substantial. If this applies to you, you may want to take steps to reduce your income before year-end to avoid a large tax bill. Contact us for more information.
  • If your income is variable, consider forgoing advance payments for 2024 to avoid having to pay it back if your income in 2024 is higher than allowed for the tax credit.  If you do qualify, you still get the tax credit on your tax return.

(303) 499-7445

info@tandemcpas.com

287 Century Circle, Suite 200, Louisville, CO 80027

Tandem CPAs LLC  (Colorado firm license #FRM.5000548).

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