Author Topic: MAGI and the ACA  (Read 1610 times)

Exflyboy

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MAGI and the ACA
« on: February 23, 2015, 01:31:01 PM »
Hi all,

So the ACA calculates subsidies based off your MAGI. The IRS defines MAGI as "Your AGI (line 37) plus tax exempt interest.. Parapharasing.

So what is tax exempt interest... does this include..

Capitial gains?
Qualified dividends?
Traditional IRA deduction?

Thanks








CuencaSolo

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Re: MAGI and the ACA
« Reply #1 on: February 23, 2015, 05:16:42 PM »
It's worth checking the definitions of terms on the IRS website if it's important to you, but probably that would include only interest which is exempt from income tax.  That's interest from municipal bonds, mostly.

Hi all,

So the ACA calculates subsidies based off your MAGI. The IRS defines MAGI as "Your AGI (line 37) plus tax exempt interest.. Parapharasing.

So what is tax exempt interest... does this include..

Capitial gains?
Qualified dividends?
Traditional IRA deduction?

Thanks

Spork

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Re: MAGI and the ACA
« Reply #2 on: February 23, 2015, 05:20:22 PM »
Hi all,

So the ACA calculates subsidies based off your MAGI. The IRS defines MAGI as "Your AGI (line 37) plus tax exempt interest.. Parapharasing.

So what is tax exempt interest... does this include..

Capitial gains?
Qualified dividends?
Traditional IRA deduction?

Thanks

I'm not a tax expert, but I'd say yes.  Just look at your 1040.  Everything above line 37 is in there.  There are a few "downward adjustments" ... but not that many.  This is before traditional deductions/exemptions are applied.

MDM

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Re: MAGI and the ACA
« Reply #3 on: February 23, 2015, 07:47:05 PM »
I think CuencaSolo has it correct: the answer to the three "does this include" questions is "no."

E.g., see http://www.investopedia.com/terms/t/taxexemptinterest.asp.

TreeTired

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Re: MAGI and the ACA
« Reply #4 on: February 23, 2015, 07:52:32 PM »
I believe MAGI does include capital gains (net of gains and losses)  as well as interest and dividends.   If you own muni bonds you must also include that interest in MAGI.