Obamacare means Roth conversions way more expensive

[Gone4Good]

Anyone know what the definition of "income" is/will be? And will what they use for 2014 be based on 2013 or 2012 tax returns (or something else)?

I tried to look it up way back. I recall thinking that it comes from a fairly high level on your 1040 (above AGI). Don't count on getting special treatment for dividends, IRA contributions, or muni interest.

With respect to "which tax year" I think it will be based on 2014 income with penalty / subsidy payments trued-up at tax time in 2015.

 

[LOL!]

Here's an article about a guy requesting a pay cut in order to qualify for better health care for his daughter: http://www.nytimes.com/2012/06/30/us/for-uninsured-in-texas-ruling-adds-uncertainty.html

 

[Nords]

I'm too lazy to try to read all of the stuff about this, but am I accurate if I say that since I am on Medicare/Tricare that I will incur no new federal taxes under this legislation?
That almost seems to easy.

I know how you feel. I had illusions of writing a blog post on this topic but I gave up after an hour's research.

The short answer is that Tricare beneficiaries are exempted from this legislation. I may be glossing over the finer points but that's the Cliff Notes version.

 

[Animorph]

I'm too lazy to try to read all of the stuff about this, but am I accurate if I say that since I am on Medicare/Tricare that I will incur no new federal taxes under this legislation?

That almost seems to easy.

If you exceed the capital gains limits ($250k married?) you would get hit with the extra Medicare surcharge. That's all that comes quickly to mind.

 

[Nords]

If you exceed the capital gains limits ($250k married?) you would get hit with the extra Medicare surcharge. That's all that comes quickly to mind.

I'm kinda confused on that, but I thought the Medicare surcharge only applied to income taxes on earned income-- not cap gains.

 

[audreyh1]

I'm kinda confused on that, but I thought the Medicare surcharge only applied to income taxes on earned income-- not cap gains.

Nope, starting 2013 that threshold is based on your AGI which includes cap gains and other taxable passive income.

 

[Nords]

Nope, starting 2013 that threshold is based on your AGI which includes cap gains and other taxable passive income.

Sheesh. I sure hope TurboTax is on top of all of this.

Either that or I'll just have to try to keep our AGI under $250K-- yeah, I think I can make that work...

 

[audreyh1]

Either that or I'll just have to try to keep our AGI under $250K-- yeah, I think I can make that work...

There ya go! A simple strategy LOL!

 

[Zathras]

I thought the Medicaid expansion was the one part of the law the SC struck down.

Not quite. My understanding is that the SC ruled that the penalty from the Feds for states refusing to expand Medicare can't exceed simply not getting the federal subsidies for that expansion (100% for the first 3 years, then 90%).

 

[MichaelB]

Not quite. My understanding is that the SC ruled that the penalty from the Feds for states refusing to expand Medicare can't exceed simply not getting the federal subsidies for that expansion (100% for the first 3 years, then 90%).

That is my understanding as well. From SCOTUSblog http://www.scotusblog.com/2012/06/c...ve-choice-whether-to-join-medicaid-expansion/

The Court’s decision on the constitutionality of the Medicaid expansion is divided and complicated. The bottom line is that: (1) Congress acted constitutionally in offering states funds to expand coverage to millions of new individuals; (2) So states can agree to expand coverage in exchange for those new funds; (3) If the state accepts the expansion funds, it must obey by the new rules and expand coverage; (4) but a state can refuse to participate in the expansion without losing all of its Medicaid funds; instead the state will have the option of continue the its current, unexpanded plan as is.