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Old 12-15-2014, 02:11 PM   #21
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They allowed me to cash out my accrued vacation, which is why I delayed beyond the holidays in the first place -- to take advantage of the lower tax bracket!
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Old 12-15-2014, 02:11 PM   #22
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Had a face-palm moment when I finally sat down with my freshly downloaded tax software! Having retired Jan 3rd, I wanted to calculate my withdrawals to get to the exact amount that keeps me just above Medicaid threshold. It's been many a year since I was eligible for a regular IRA contribution, and I just realized that I can withdraw just a little more, then adjust it down with said contribution. Another niggling stress factor eliminated!
Note that your maximum IRA contribution is limited to the amount of earned income during the year...
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Old 12-15-2014, 02:21 PM   #23
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I'll probably need another strategy next year then!
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Old 12-15-2014, 02:24 PM   #24
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You can always go back to work.

Saver's credit is luring me back, help.
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Old 12-15-2014, 02:51 PM   #25
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Thanks for all the replies! I talked to my credit union and they say I can open a new Roth, take a distribution from one or more of my trad IRA's, fund the Roth with the distribution. They say that will generate a 1099-R, or perhaps two 1099-R's, with a transaction date in 2014. Good. But they were uncertain about whether it would be considered taxable income. I mentioned that it must be, since I was "cashing in" a pre-tax trad IRA to fund the Roth. They would not confirm that it would be taxable income, or even that it would be income at all. They kept saying it would be "a wash". Suggested I ask a tax advisor. They said they can do the Roth conversion the same day I fill out the electronic form online, so that's good news. No panicking needed about missing the deadline. Here's what I believe to be true at this point: 12/31/2014 is indeed the deadline. I can have them do the Roth conversion before 12/31/2014 and I will receive a 1099-R describing it. The 1099-R will refer to a distribution from a traditional IRA, and that the receiving fund was a Roth IRA, and the 1099-R will have a 2014 date on it. OK. Questions remaining: Will this 1099-R indicate that the distribution was income for 2014? Seems obvious, but the credit union was unsure. Can I still "open" the new Roth, being retired and unemployed? I forgot to mention to the CU that I am retired. Thanks !
Whether your are retired or not doesn't matter. You can open a Roth anytime. If you are under 59 1/2 you want to make sure that the transfer from your tIRA to your Roth is characterized as a Roth conversion and not a distribution because a distribution would attract a 10% penalty if your are under 59 1/2 but a conversion does not.

Assuming that the tIRA is pre-tax monies (or deductible contributions) it will be income for both tax purposes and Obamacare purposes. If the tIRA is a mix of deductible and non-deductible contributions, then it gets more complicated.
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Old 12-15-2014, 03:49 PM   #26
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Jim,

I do mean 2014 income. I am currently on a 2014 ACA policy, heavily subsidized due to the low estimated 2014 income I supplied when I applied. But... my 2014 income so far is below the $15,xxx minimum for 2014 needed to avoid Medicaid. From what I've read, if I don't get my 2014 income above $15,xxx I "may" have to repay the large subsidies I have been getting every month for the ACA policy I have.

Same story for 2015. I will need to find more income for 2015 to avoid Medicaid. I was actually considering Medicaid but have decided to avoid it.

That $15,xxx minimum was a 2013 number. 138% of 2014 poverty level is $16,105 so your income needs to exceed that if in a Medicaid state.







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Old 12-15-2014, 05:27 PM   #27
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That $15,xxx minimum was a 2013 number. 138% of 2014 poverty level is $16,105 so your income needs to exceed that if in a Medicaid state.

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I'm glad you mentioned that, Refresher. From what I've read online, I understood that $15,xxx ($15,856) was the number you need to get over for your 2014 income, in order to avoid Medicaid. And I believe that when I do my taxes in 2016, for 2015 income, I will be trying to get over the $16,105 number.

I could have this wrong, but from the websites I've read, including Healthcare.gov, I think I am right. However, the websites are never very clear about what number ($15,856 or $16,105) to use for which tax year .

As of now I will be arranging my 2014 income to be over $15,856, to avoid Medicaid, and qualify for ACA.

Correction / confirmation welcomed.
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Old 12-15-2014, 06:54 PM   #28
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..

I could have this wrong, but from the websites I've read, including Healthcare.gov, I think I am right. However, the websites are never very clear about what number ($15,856 or $16,105) to use for which tax year .
...
Don't the poverty thresholds, which I believe that the ACA income levels are based upon, vary state-by-state? Ie. higher cost of living in Hawaii compared to Mississippi etc. Perhaps this could be leading to the vagueness.

-gauss
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Old 12-15-2014, 09:43 PM   #29
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I'm glad you mentioned that, Refresher. From what I've read online, I understood that $15,xxx ($15,856) was the number you need to get over for your 2014 income, in order to avoid Medicaid. And I believe that when I do my taxes in 2016, for 2015 income, I will be trying to get over the $16,105 number.

I could have this wrong, but from the websites I've read, including Healthcare.gov, I think I am right. However, the websites are never very clear about what number ($15,856 or $16,105) to use for which tax year .

As of now I will be arranging my 2014 income to be over $15,856, to avoid Medicaid, and qualify for ACA.

Correction / confirmation welcomed.

Federal Poverty Level 2014 - 2015

see link
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Old 12-15-2014, 09:49 PM   #30
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Don't the poverty thresholds, which I believe that the ACA income levels are based upon, vary state-by-state? Ie. higher cost of living in Hawaii compared to Mississippi etc. Perhaps this could be leading to the vagueness.

-gauss

Alaska and Hawaii are different, the other 48 states are the same.

The tax return we do in 2015 for 2014 income needs 16105 to avoid Medicaid.
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Old 12-16-2014, 11:47 AM   #31
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...........

The tax return we do in 2015 for 2014 income needs 16105 to avoid Medicaid.
Well, when I submitted my ACA application in Fall 2013, I estimated 16,000 ($15,8xx was 138 % of 2013 FPL) for my 2014 income, and the website accepted 16,000 as enough to avoid Medicaid. But when I do my taxes this Spring 2015, for tax year 2014, the tax form will be looking for $16,105 as a minimum 2014 income to avoid Medicaid? Just trying to understand!
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Old 12-16-2014, 12:14 PM   #32
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They updated the FPL amount on 1/22/14 in the Federal Register.
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Old 12-16-2014, 11:14 PM   #33
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They updated the FPL amount on 1/22/14 in the Federal Register.
I remember a change early 2014 as well.
I had heard that $15856 # in Oct 2013 but the number rose in 2014 as the poverty level increases every year. I would think the 2015 income would need appx. $16,400 so I would use at least that amount as projected income for 2015 and your premiums will be based on that income.
This year why not do a Roth conversion to bring your 2014 income over $16,105. I am almost certain it must be done by 12/31/14. Your tax bracket will remain 10%.
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Old 12-17-2014, 09:05 AM   #34
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Your tax on $16,000 of ordinary income would be $588 per Taxcaster (assuming single and standard deductions) so your overall tax rate would only be 3.7% even though your marginal tax rate is 10%. IOW any additional Roth conversions would increase you tax bill by 10% of the additional Roth conversion.
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Old 12-18-2014, 09:21 AM   #35
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FWIW, the poverty thresholds change depending on the number of people in your household.

As far as calculating premium credits for your own situation, the IRS will use Form 8962 Premium Tax Credit (PTC) for this purpose.

Although the final version of this form may still be in draft status, preliminary versions can be found via googling irs.gov with the site option to reveal the draft form and the draft instructions.


-gauss
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Old 12-18-2014, 05:08 PM   #36
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Well, when I submitted my ACA application in Fall 2013, I estimated 16,000 ($15,8xx was 138 % of 2013 FPL) for my 2014 income, and the website accepted 16,000 as enough to avoid Medicaid. But when I do my taxes this Spring 2015, for tax year 2014, the tax form will be looking for $16,105 as a minimum 2014 income to avoid Medicaid? Just trying to understand!
JGIII,

Did the following condition apply to you in 2014?

Quote:
"The Marketplace estimated at the time of your enrollment that your household income would be between 100% and 400% of the Federal poverty line for your family size for 2014."
If so, you may be protected from paying back any advance premium credit that you received if your income was less than 100% of the Federal poverty level.

This is from the draft form 8962 and instructions that I posted above -- line 6 to be specific.

This package also lists a table that limits the claw back for folks with income less than 400% of FPL. Folks with more than 400% of FPL will have all of the advanced credit clawed back.

FWIW - There are hardly any references to 133% of FPL in the instructions -- just 100% and 400%. I didn't see a requirement to be over 133% to get a credit, just between 100 and 400%. I haven't parsed the whole document so it is possible that they could phrase the 133% number differently that would not have gotten picked up via my acrobat search.

Hopefully this will be useful information for anyone trying to do end of year planning for ACA. Please remember that it is considered draft at this point, however.

-gauss
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Old 12-19-2014, 12:59 PM   #37
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Gauss, Thanks for the info. I have decided to play it safe and take out the Roth conversion so that my estimated 2014 income will be approx $16,450, comfortably above the $16,105 Medicaid number. I will have to pay additional $520 in taxes due to my $5,200 Roth conversion. I'm getting a good deal with the premium subsidies and the cost sharing, even with the extra $520 tax hit.
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