Get 2018 taxable income down to $19k, saver's credit and insurance subsidies?

[ketchup]

I just want to make sure I'm getting this right:

My girlfriend is 25, and 26 next August.  She's presently still on her dad's health insurance.  I have coverage through work.  She's self-employed.

If we weasel her taxable income down to $19k next year (via solo 401k/IRA/etc contributions, probably frontload some of her business expenses ahead of 2019), according to healthcare.gov that puts her at a $294 subsidy which basically means a $0-50/mo premium for health insurance, once she needs it at 26 in August.  It would also be low enough for a big saver's credit.  Together this would save us a substantial amount of money.

We live together, but obviously aren't married.  If we were married, she wouldn't be eligible for subsidies since she could get on my work plan, right?

Am I missing something here?  Would her income for the ACA plan be based on 2017, in which case we'd have to do a similar dance this year to get her taxable income low enough?  Am I overthinking this?

Thanks.

[terran]

If she could be added to your health insurance if married, then yes, that would mess up any subsidies she would get. Your income would also be a factor.

I'm not certain about this, but I'm pretty sure her 2018 subsidies will be based on what she projects her 2018 income to be, and she would have to pay them back if her income ended up being higher than she projects. I don't think it should matter what her 2017 income is (but I'm not certain, so double check on that).

[teen persuasion]

ACA subsidies would be based on 2018 (current) income.  Be careful how she projects it when applying: ACA is based on annual figures, but state Medicaid looks at monthly figures.  You must be approved before the 15th of the month to begin coverage on the first of the next month, so start the application process early.

If we weasel her taxable income down to $19k next year (via solo 401k/IRA/etc contributions, probably frontload some of her business expenses ahead of 2019),   

You want to target AGI to $19k (I'm not always sure exactly what taxable income means - before or after deductions and exemptions?) for the Retirement Saver's credit.  If she's at $19k AGI and filing single, 50% of $2k retirement contributions should wipe out her income tax, but I don't think it applies to SE tax.  Walk thru the form 8880 to find pitfalls.

[terran]

Yeah, the savers credit does not apply to self employment tax. There are very few (if any) circumstances in which you can get the full 50% credit while still qualifying since it's non refundable.

[ketchup]

OK, thanks for the input guys.

I'm definitely aware that self-employment tax is not touched by the Saver's Credit.  That's just life.

ACA subsidies would be based on 2018 (current) income.  Be careful how she projects it when applying: ACA is based on annual figures, but state Medicaid looks at monthly figures.  You must be approved before the 15th of the month to begin coverage on the first of the next month, so start the application process early.

She'd care about ACA plans, not Medicaid, so I think the annual numbers are fine.  We'll keep in mind the 15th deadline to ensure continuous coverage.

[teen persuasion]

OK, thanks for the input guys.

I'm definitely aware that self-employment tax is not touched by the Saver's Credit.  That's just life.

ACA subsidies would be based on 2018 (current) income.  Be careful how she projects it when applying: ACA is based on annual figures, but state Medicaid looks at monthly figures.  You must be approved before the 15th of the month to begin coverage on the first of the next month, so start the application process early.

She'd care about ACA plans, not Medicaid, so I think the annual numbers are fine.  We'll keep in mind the 15th deadline to ensure continuous coverage.

Sorry I wasn't clearer - what I meant was don't get shunted to Medicaid when you really want ACA instead.  When DH was between jobs, I'd run the annual numbers and figured we'd be good for ACA coverage.  Our state has its own site, and they asked for current monthly income, and I used our actual $ (0 for DH, part time for me) and got put on Medicaid for those few months until he was in at his new employer.  If I'd reported our expected annual income (as I wanted to do) we would have been in ACA territory, but they specifically asked for next month's income.  Knowing the pitfalls now, I'd report average expected income instead if possible.  It's all projections anyway, right?