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Old 01-21-2016, 01:58 PM   #21
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You guys are confusing things too much - AGI is at the bottom of the 1040 first page and ALREADY includes all the IRA, HSA etc. deductions on the first page. MAGI for ACA purposes simply adds back a few items that were already deducted. So IRAs don't reduce AGI or MAGI because they're already a part of both - the terminology you're using is incorrect in other words because IRAs and HSAs reduce gross income not AGI or MAGI. A better way to say it is that common deductions like IRAs are already included in MAGI.

http://obamacarefacts.com/wp-content...ating-MAGI.png
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Old 01-21-2016, 02:08 PM   #22
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It's likely that if you don't have municipal bonds, your AGI is equal to MAGI.

If reducing MAGI by $3,000 would keep me away from the cliff, I'd sell the S&P index and buy the total market index.
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Old 01-21-2016, 05:27 PM   #23
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Is it too late for you to contribute 100% of your vacation pay to your 401k? That would reduce your MAGI.
The way our 401k is set up with Fidelity, we arent allowed to contribute once we retire. I retired last Jan, but am still getting paid 1/2 of my salary untill all of the vacation and sick pay run out which will be in another couple weeks.
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Old 01-21-2016, 05:34 PM   #24
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So to be clear, let me give an example with fake numbers:

Pension...$30000
Vacation pay...$5000
Dividends and Cap gains end up being...$35000
Total income = $70,000

I sell SPY ETF right now at a $20,000 loss and buy VTI.

My MAGI is $50,000 correct? And I can still take withdrawals if I need them as long as its not from 401k which would be income, and I dont sell anything from my taxable accts that have a capital gain.
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Old 01-21-2016, 06:14 PM   #25
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Thanks for correcting me. Doh! I had it really wrong.
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Old 01-21-2016, 06:15 PM   #26
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Originally Posted by utrecht View Post
So to be clear, let me give an example with fake numbers:

Pension...$30000
Vacation pay...$5000
Dividends and Cap gains end up being...$35000
Total income = $70,000

I sell SPY ETF right now at a $20,000 loss and buy VTI.

My MAGI is $50,000 correct? And I can still take withdrawals if I need them as long as its not from 401k which would be income, and I dont sell anything from my taxable accts that have a capital gain.
How much of $35000 is due to cap gains?

You can use your cap losses to offset $3k in income and then use the remaining $17k to offset any cap gains. However, you cannot use the cap losses to offset dividends (besides the first $3k in income).
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Old 01-21-2016, 06:54 PM   #27
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How much of $35000 is due to cap gains?

You can use your cap losses to offset $3k in income and then use the remaining $17k to offset any cap gains. However, you cannot use the cap losses to offset dividends (besides the first $3k in income).
Gotcha! Thanks.
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Old 01-21-2016, 07:36 PM   #28
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The way our 401k is set up with Fidelity, we arent allowed to contribute once we retire. I retired last Jan, but am still getting paid 1/2 of my salary untill all of the vacation and sick pay run out which will be in another couple weeks.
If this is earned income subject to FICA, etc. that will be reported on a W2, can't you contribute it to an IRA this year?
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Old 01-21-2016, 08:27 PM   #29
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More like 67k. It would be nice to be able to take off more than 3k!!
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Old 01-21-2016, 08:49 PM   #30
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More like 67k. It would be nice to be able to take off more than 3k!!
But if I have a capital loss of $20000 when I sell SPY shares that I bought recently and at the end of the year I end up with $20000 in capital gains distributed to me from mutual finds, they cancel out dont they?
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Old 01-21-2016, 08:51 PM   #31
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If this is earned income subject to FICA, etc. that will be reported on a W2, can't you contribute it to an IRA this year?
Yes I could, but I dont really want to.
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Old 01-21-2016, 08:55 PM   #32
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You're referring to the wash sale rule and whether the securities would be "substantially identical" in the eyes of the IRS.

"Substantially identical" can be a guessing game with them. Personally I would not sell an S&P 500 index fund and immediately buy another S&P 500 index fund and expect to claim the loss. Even though one is an ETF and one a mutual fund, I think this has a decent chance of being classified as a wash sale by the IRS.
+1 since they are both S&P 500 index funds they are IMO substantially identical. You could sell SPY and buy Total Stock Market or perhaps a different large cap index fund and then flip it back after 31 days.
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Old 01-21-2016, 08:56 PM   #33
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But if I have a capital loss of $20000 when I sell SPY shares that I bought recently and at the end of the year I end up with $20000 in capital gains distributed to me from mutual finds, they cancel out dont they?
Yes, they would.
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Old 01-21-2016, 09:00 PM   #34
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Yes I could, but I dont really want to.
Well at least you have until April of 2017 to make that call.
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Old 01-21-2016, 10:37 PM   #35
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Yes, they would.
Yep...didn't take in the whole scenario...I've been nibbling away, 3k at a time for way too long
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400% FPL is based upon 2015 taxes
Old 01-22-2016, 09:29 AM   #36
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400% FPL is based upon 2015 taxes

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This will be the first time Ive signed up for an non employer health insurance policy. Including my pension, a small amount of money I will be paid this month for left over vacation time and my estimate of dividends and capital gains, Im right at the subsidy cliff. I mean RIGHT at it. I'm a few dollars away from getting $265/month subsidy or zero.

What would you do in this situation? I cant adjust my income level in the way of the pension or the vacation pay.

How do I accurately estimate my dividends and capital gains? They vary wildly from year to year. At least mutual fund capital gains do. If I estimate low and my income goes over the cliff is there a penalty applied to next years taxes?

Are any deductions included in the calculation? Or are we just talking income? Also, can I wait til the end of 2016 and if my dividends and capital gains are higher than expected and are going to put me over the cliff, can I then sell some losers to write off against those capital gains and dividends?

Your 2016 ACA subsidy is based upon your 2015 taxes. So, things are already known for the subsidy. For the 400% FPL subsidy, google it. Here's a link https://www.healthinsurance.org/obam...emium-subsidy/ that has a chart.
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Old 01-22-2016, 09:55 AM   #37
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Happily Retired, based on my understanding, the subsidy for 2016 is based on one's income in 2016.
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Old 01-22-2016, 09:56 AM   #38
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Your 2016 ACA subsidy is based upon your 2015 taxes.

Right and wrong. Only if your pay stays in the same range. If your magi goes up or down then when you file your taxes they adjust. They adjust your subsidy to your 2016 final pay.

Youngster beat me to it.
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Old 01-22-2016, 12:59 PM   #39
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The actual PTC is always reconciled at the end of the year on your tax return (8962) based on that years income.

The APTC that is often advanced by the marketplace toward your premium is based on forecasted income often justified by prior years income.

As mentioned in the first paragraph, these advance payments will be reconciled for any over/under payment when you file your tax return. Repayments of over-payment of APTC in some cases may be capped or reduced to 0 during the reconciliation process on form 8962.

-gauss
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Old 01-22-2016, 08:15 PM   #40
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I thought that if you are close to the ACA cliff and accidentally go over and don't discover until early next year, you can still fix it. This is done by contributing to an IRA before April 15. This contribution can be for the prior tax year. So if you are only a few grand over, all can be fixed, correct?

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