Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
If in 15% tax bracket, do capital gains count for ACA MAGI?
Old 06-01-2014, 10:25 AM   #1
Confused about dryer sheets
 
Join Date: Mar 2008
Posts: 6
If in 15% tax bracket, do capital gains count for ACA MAGI?

My apologies if this has been discussed before, I've been searching through threads and haven't been able to find this answer. In ER, DH and I will be in the 15% tax bracket, so my understanding is for income tax purposes, capital gains will be taxed at 0%.

My question is, will the capital gains count for the ACA MAGI for subsidy calculation? I'm actually hoping that they will, since our income without capital gains might be too low to qualify for subsidized Exchange insurance and put us in Medicaid which I don't know enough about to be comfortable with yet.

I have found out from reading the board that I can use Roth conversions to tweak our MAGI if needed, but finding out about how capital gains are treated would be very helpful. Thanks!
__________________

__________________
ctmm is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-01-2014, 10:36 AM   #2
Recycles dryer sheets
fosterscik's Avatar
 
Join Date: Jun 2013
Posts: 183
It's important to note these facts:
"I often read in the financial press that taxpayers will pay no capital gains taxes if taxable income does not exceed the upper limit of the 15% tax bracket, which will be $73,800 in 2014 for joint returns and $36,900 for single returns. While this is correct, it omits the fact that those capital gains will be added to your taxable income, possibly pushing some or all of your gains out of the zero capital gains tax bracket."
and
"Let's say that Joe has $93,800 of combined annuity income, traditional IRA distributions, interest, and dividends and $20,000 of exemptions and deductions. His taxable income before selling stocks will be $73,800. Should Joe sell stocks with a long term capital gain of $10,000, all of the gain will be taxed at 15%, not zero. That's because his other $73,800 of taxable income has already pushed him out of the zero percent tax bracket before the capital gains are added."
and
"Retirees receiving Social Security benefits should also be aware that increasing AGI by selling capital assets for a gain might trigger or increase taxes on Social Security benefits. You may pay no Federal capital gains tax on the stock sale only to see your Social Security taxes increase."
See:
The Retirement Cafe: Zero Capital Gains Tax
__________________

__________________
fosterscik is offline   Reply With Quote
Old 06-01-2014, 11:21 AM   #3
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,487
Quote:
Originally Posted by ctmm View Post

My question is, will the capital gains count for the ACA MAGI for subsidy calculation? I'm actually hoping that they will, since our income without capital gains might be too low to qualify for subsidized Exchange insurance and put us in Medicaid which I don't know enough about to be comfortable with yet.
Yes. Capital gains are counted as income for calculating PPACA premium assistance and subsidies. See page 6 here http://www.ncsl.org/documents/health...medicdprov.pdf
Quote:
The Definition of Income Under PPACA In Section 2002(a) and Section 1401(a) of PPACA, household income is defined to be MAGI in compliance with the Internal Revenue Code (IRC). Specifically, gross income is total income minus certain exclusions (e.g., public assistance payments, employer contributions to health insurance payments). From gross income, adjusted gross income (AGI) is calculated to reflect a number of deductions, including trade and business deductions, losses from sale of property, and alimony payments. MAGI is defined as AGI plus certain foreign earned income and tax-exempt interest

__________________
MichaelB is online now   Reply With Quote
Old 06-01-2014, 05:11 PM   #4
Thinks s/he gets paid by the post
grasshopper's Avatar
 
Join Date: Oct 2010
Posts: 1,671
Long term capital gains if you are in 15% tax bracket, short term capital gains are ordinary income. Either is included in AGI.
__________________
For me experiences are not good or bad, just different
grasshopper is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 2 (0 members and 2 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Capital Gains, Income Tax, Property Tax and Mortgage Interest Deductions nico08 FIRE and Money 11 11-14-2013 05:53 PM
How Cap Gains/Carryover Losses impact MAGI under ACA NoMoreJob FIRE and Money 4 10-17-2013 12:59 PM
Cap Gain Impact on MAGI under ACA? NoMoreJob Health and Early Retirement 3 10-04-2013 12:41 PM
ACA, MAGI and Roth conversions JoeDreaming FIRE and Money 26 04-01-2013 04:46 PM
Roth Conversion or Cap Gains within 15% Tax Bracket RE2Boys FIRE and Money 9 09-25-2012 12:47 PM

 

 
All times are GMT -6. The time now is 06:13 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.