Health Care

Health Care

How do health care reform and taxes connect? The Affordable Care Act is single largest change to the tax code in two decades. Find help navigating the complexities of the new health care legislation, Medicare, Medicaid and other medical deductions.

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Pioneer
Posts: 2
Registered: ‎03-28-2017
Accepted Solution

family of 3 income cutoff

Could you confirm the maximum income amount for a family of 3. Is it $80,640 for filing 2017 tax return. 

 

Many thanks

Council Member
Posts: 516
Registered: ‎04-06-2016

Re: family of 3 income cutoff

100% of the FPL for 2017 ACA insurance purposes is $20,160, so the 400% FPL limit for subsidies is $80,640. You are correct.

 

A couple things to note:

1) This is based on your AGI.


2) If you're close to this limit or slightly over, look into your eligibility to make a tax-deductible contribution to a Trad-IRA. If you can contribute, any amount you do will reduce your AGI which could put you under the 400% FPL and make you eligible for subsidies and the cap on what you have to repay.  If you're just slightly over the limit, say your AGI is $81,000, you could be looking at paying back nearly $10,000 in APTC.  If instead, you contribute $1000 to a deductible Trad-IRA, your AGI will be $80,000 making you eligible for the subsidies.  That $1000 invested for your retirement could save you $10,000 in tax liability!! Even if your AGI is $90,000 and you're filing MFJ. If you and your spouse can each contribute $5,000 to a deductible Trad-IRA you could reduce your AGI to $80,000 ($90,000-$10,000 in Deductible Trad-IRA contributions). In this case, it's costing you $10,000 either way, but in one case, it's still yours-- just in a retirement account. In the second case, it's the IRS's and gone forever.


Here's a link that will help you figure out if you're eligible to contribute to a deductible Trad-IRA and how much you can contribute. 

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-li...

https://www.irs.gov/retirement-plans/ira-deduction-limits

 

If you're in the situation where you've already made a Roth IRA contribution and therefore have met your contribution limit, you should be able to recharacterize your Roth contribution (all or part) to be treated as a Trad-IRA contribution-- which would make it deductible if you meet the eligibility requirements.

 

Karen