Capital gains & Health Care

[FIstateofmind]

Hey all,

I have some taxable investments which this year pushed me into a higher income bracket, as my gains showed up as income on my tax return.

My credit was cut in half and I have to pay more for coverage, despite the fact that my adjusted gross income was much lower my gains.

any solutions/advice articles to refer me to? Thanks!

[Rob_bob]

Were those gains from mutual funds?  ETFs tend to be more tax efficient.

[seattlecyclone]

Your adjusted gross income includes any investment income. To say that your adjusted gross income was lower than your gains implies that you had negative income from all other sources. That's pretty rare. Going forward you'll need to estimate how much dividend and capital gains income you will have in order to budget appropriately for how much ACA subsidy you will receive.

[DreamFIRE]

https://www.healthcare.gov/income-and-household-information/income/

[FIstateofmind]

Your adjusted gross income includes any investment income. To say that your adjusted gross income was lower than your gains implies that you had negative income from all other sources. That's pretty rare. Going forward you'll need to estimate how much dividend and capital gains income you will have in order to budget appropriately for how much ACA subsidy you will receive.

I'm saying that my total income was higher than my adjusted gross income. My gains were 1/3 of my total income. When I called healthcare.gov they informed me that my eligibility was based on my total income.

What I'm confused about is seeing others in the FIRE community posting and how they are earning free health care when capital gain are counted as income...

[DreamFIRE]

I'm saying that my total income was higher than my adjusted gross income. My gains were 1/3 of my total income. When I called healthcare.gov they informed me that my eligibility was based on my total income.

What I'm confused about is seeing others in the FIRE community posting and how they are earning free health care when capital gain are counted as income...

It's based on MAGI as mentioned at the webpage I linked to in my last post.  It's not free, though.

You can regulate you MAGI to optimize for ACA PTC & CSR.  See this thread:

https://forum.mrmoneymustache.com/ask-a-mustachian/information-on-the-affordable-care-act-with-a-focus-on-early-retirees/

[MDM]

I'm saying that my total income was higher than my adjusted gross income. My gains were 1/3 of my total income. When I called healthcare.gov they informed me that my eligibility was based on my total income.

Your MAGI for ACA purposes (as DreamFIRE noted) is the total of the following for each member of your household who’s required to file a tax return:

    Your adjusted gross income (AGI) on your federal tax return
    Excluded foreign income
    Nontaxable Social Security benefits (including tier 1 railroad retirement benefits)
    Tax-exempt interest

Not sure where the phrase "total income" is being defined and used (or even relevant) - can you clarify?

[Zacharias]

Your MAGI for ACA purposes (as DreamFIRE noted) is the total of the following for each member of your household who’s required to file a tax return:

    Your adjusted gross income (AGI) on your federal tax return
    Excluded foreign income
    Nontaxable Social Security benefits (including tier 1 railroad retirement benefits)
    Tax-exempt interest

Not sure where the phrase "total income" is being defined and used (or even relevant) - can you clarify?

My suggestion was going to be to take a quick look at the marketplace articles on income and deductions because, in my experience with marketplace representatives, they don't always know themselves what goes into the equation. One even told me just to enter my total income and that there are no deductions from earnings. So if you're calling the marketplace, have a good handle on what counts as income and what can be deducted before you call.

However, while I was crafting a response to the OP I came across the list of deductions to include/exclude from income at https://www.healthcare.gov/reporting-deductions/ and am now confused about my own reported MAGI. I was surprised to see it list HSA deposits as an excluded deduction since it lowers AGI but is not listed as being added back in to arrive at MAGI.

Have I been reporting my own MAGI incorrectly by deducting my own HSA contributions?

[DreamFIRE]

However, while I was crafting a response to the OP I came across the list of deductions to include/exclude from income at https://www.healthcare.gov/reporting-deductions/ and am now confused about my own reported MAGI. I was surprised to see it list HSA deposits as an excluded deduction since it lowers AGI but is not listed as being added back in to arrive at MAGI.

Have I been reporting my own MAGI incorrectly by deducting my own HSA contributions?

Don't add HSA back in.