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ACA income calculation question
Old 11-08-2015, 09:39 AM   #1
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ACA income calculation question

I'm playing with TurboTax, trying to figure out what income to use for ACA enrollment after I retire next year and I've got some questions.

We have a passive activity loss of $30K on form 8582, but we're limited by income and AMT as to how much we can claim, so it sits there as a carryover year after year. In our first year of retirement, when we have no W-2 income, the limitations will no longer apply and we'll use $25K of the loss to offset taxable investment income, leaving us with taxable income of $6K. Adding back tax-exempt interest gets us to an ACA income of $7500.

First, is this the correct calculation? Do you count passive activity losses as part of income? I can't find anything that says to add them back in.

Second, what happens if I tell the state exchange (Covered CA) I expect to have $22K of income but then only report $7500 when I do that year's taxes? Is there a penalty for overstating your income? Will they force us into Medi-Cal the following year, even though the carryover loss won't put us below the line during our second year of retirement?

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Old 11-08-2015, 09:57 AM   #2
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I don't know about the Medi-Cal question.

I'm sure someone can correct me if wrong, but I look at the estimated income for ACA enrollment sort of like a W-4 as an attempt to make the differences at the end as close to zero. If you end up getting too much of a premium tax credit, then you pay back, if too little then you get a refund.
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