MAGI-Where This Number Applies In ObamaDoesntCare

By June 11, 2015 Tax Strategy, Taxes

What MAGI Has to do With Your Situation

One of the most Important Numbers in Your ObamaCare Subsidy

Did you know that the tax code is not straight forward?  Did you know that ObamaCare is probably the most confusing piece of garbage that has ever left the office of the President?

One example of this change is the way the term Modified Adjusted Gross Income is used.  This is lovingly referred to as MAGI and is one of the most important numbers for your ObamaCare subsidy.  The confusion is that there is a MAGI used for your ROTH IRA, a different one for claiming education credits, and an even different one for claiming your ObamaCare (or ACA) subsidy credit.

Let’s Break It Down

So let me help you understand what MAGI is, for purposes of determining what your subsidy credit could be. You take your Adjusted Gross Income plus your non-taxable social security benefits plus your tax-exempt interest plus foreign income excluded from your income.  Simple enough right.  Hopefully we can make it a little easier for you to calculate it.

Click to enlarge

Break Down of MAGI

For most people, your adjusted gross income on line 37 of your 1040 form will be the same as your modified adjusted gross income for ObamaCare purposes.

∗The kicker with determining your MAGI for subsidy credits is that you have to include everyone in your household.  So if your dependents are earning income, you have to include their income in your calculation.

Final note. Please keep in mind that ACA was created by the most intelligent legal minds of our country.  While you may or may not hate it, the government will eventually get what it wants.  You will either have health insurance or pay a ridiculous fine.  The ACA is designed to be very painful financially in the coming years if you don’t have coverage.

You Can’t Beat The System

Also, you can’t game the system.  There is no point in lying on the health exchange to get a subsidy now thinking you got away with something.  Each year when you file your tax return, the IRS reconciles what you told the health exchange to what you actually earned.  If the numbers are different you will either get more of a credit or OWE more money, quite possibly owing back everything you received in subsidies.

Find out more info on ObamaCare Affecting Your Taxes.


Call us to get more information on how ACA will affect your taxes 801-999-8295

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