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Old 10-29-2013, 10:53 AM   #41
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I have no problem with it for reasons already stated. When I asked someone from healthcare.gov how to restate my projected 2014 income, that woman freaked. Said I was defrauding the government, hurting folks that really needed subsidies, etc. I just let her go off, calmly asked the process, her response; File an appeal, don't see why I should have to appeal because the site made it unclear where to enter any losses.

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Old 10-29-2013, 11:09 AM   #42
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When I asked someone from healthcare.gov how to restate my projected 2014 income, that woman freaked. Said I was defrauding the government, hurting folks that really needed subsidies, etc.
Very unprofessional. This person should not still have this job if her reaction was really as you described it here.
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Old 10-29-2013, 11:09 AM   #43
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Sometimes..

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My blood pressure dropped considerably when I started looking at school taxes *not* as a payment to educate other people's children, but rather as paying back the cost of my own education.
But what if I didn't go through the school system and became educated on my own and comfortable with my savings at 59 and retired? And for 40 years I paid the school taxes?
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Old 10-29-2013, 11:14 AM   #44
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But what if I didn't go through the school system and became educated on my own and comfortable with my savings at 59 and retired? And for 40 years I paid the school taxes?
You can remember why you paid for their education when you receive your Social Security checks that come from their labor.

The bottom line is that as a society, we tend to remember the times we think "the system" has screwed us and ignore the places where "the system" works to our benefit. I'm not calling out anyone specifically; this is just human nature.
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Old 10-29-2013, 11:29 AM   #45
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Not that I will never take SS but at least for now and the foreseeable future I am not or will not be using SS. (Knock on Wood!!!)
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Old 10-29-2013, 12:09 PM   #46
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Both SS and Medicare are pay-as-you-go systems.

People say that "but, but, but I paid into the system, and I am owed these benefits". They forgot that these were just promises, and promises could be easily broken when there were no more "new blood", just like pensions that got into trouble. If nobody has children, where's the tax to pay for the promised benefits? When there's no money, promises are, well, tossed to the wind. Can't squeeze blood from turnips.

Many Western European nations have such low birthrate that they are now encouraging people to have more than one child. This includes long paid leaves, tax subsidies, etc... A couple of years ago, while RV'ing at the Grand Canyon, I talked with a German couple in their late 30s. They said they got a month off with pay to spend time with their infant, and took the opportunity to visit the US.
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Old 10-29-2013, 02:55 PM   #47
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Clawback -- Coming back to ACA and MAGI

Leaving the school taxes for a bit..

I read somewhere that the clawback amount is capped based on income level -- which of course becomes uncapped over 400% FPL. So the cliff at 400% FPL remains, and no ramp is available.

I would like to take a look at that primarily to satisfy my curiosity, but I wouldn't rule out one more dimension to this MAGI optimization process -- projected vs, actual!

I am not able to find that information again. Do any of you have that information or link?

Thanks.
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Old 10-29-2013, 04:01 PM   #48
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47%, If you go to the FAQ on the KFF site, they say that if you go over the 400% FPL, you have to pay it all back. 300 to 400%, married, you pay a max of 2,500. 200 to 300%, married, you pay 1,500 max. Less than 200, married, 600 max. 1250, 750, 300 for singles.

I guess what this tells me is that not getting approved for the subsidy and settling later is not the same as getting approved early, because the full price payer doesn't have access to this benefit.
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Old 10-29-2013, 04:04 PM   #49
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But what if I didn't go through the school system and became educated on my own and comfortable with my savings at 59 and retired? And for 40 years I paid the school taxes?
Then you're SOL. Life's unfair. Get used to it. And stop whining.
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Old 10-29-2013, 04:09 PM   #50
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Then you're SOL. Life's unfair. Get used to it. And stop whining.
Actually, I was responding to another quote...I wasn't complaining....if you read my posts I am not SOL, just confirming what other people have said.

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Old 10-29-2013, 04:16 PM   #51
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Then you're SOL. Life's unfair. Get used to it. And stop whining.
Actually, I was going for something less in-your-face... like

What about all the child related exemptions, deductions, credits, saving vehicles etc. the parents enjoyed when one is a child? Truth be told, I was envious of those when I was single.

It's the society's collective decision to provide help in raising a child. So having everyone pitch in for education is not qualitatively that different.
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Old 10-29-2013, 04:26 PM   #52
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47%, If you go to the FAQ on the KFF site, they say that if you go over the 400% FPL, you have to pay it all back. 300 to 400%, married, you pay a max of 2,500. 200 to 300%, married, you pay 1,500 max. Less than 200, married, 600 max. 1250, 750, 300 for singles.

I guess what this tells me is that not getting approved for the subsidy and settling later is not the same as getting approved early, because the full price payer doesn't have access to this benefit.

That's great.. Thank you very much for the info.

I am assuming you are referring to two scenarios both within the exchange in your second paragraph --overestimating your income vs. under-estimating with a subsequent clawback. In either case you *have* to go through the exchange if you are to avail of the subsidy at all.

If you bought an exchange-equivalent plan outside of the exchange, you would essentially forfeit the subsidies even if you find your income is low at the end of the year.
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Old 10-29-2013, 05:00 PM   #53
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Right, that's what I meant...going through the exchange.
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Old 10-29-2013, 10:27 PM   #54
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Actually, I was going for something less in-your-face... like

What about all the child related exemptions, deductions, credits, saving vehicles etc. the parents enjoyed when one is a child? Truth be told, I was envious of those when I was single.

It's the society's collective decision to provide help in raising a child. So having everyone pitch in for education is not qualitatively that different.
But when does it end? Parents get all those things as you wrote. But they made a lifestyle choice (to have children) which then gets all of these subsidies and tax deductions at the expense of those of us who are childfree. So why can't we childfree get a break on our local school taxes because we are not a burden on the school system? I am not saying that we childfree should pay zero in local school taxes, only that we should get a discount on those local school taxes simply because we are childfree.
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Old 10-29-2013, 10:32 PM   #55
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Both SS and Medicare are pay-as-you-go systems.

People say that "but, but, but I paid into the system, and I am owed these benefits". They forgot that these were just promises, and promises could be easily broken when there were no more "new blood", just like pensions that got into trouble. If nobody has children, where's the tax to pay for the promised benefits? When there's no money, promises are, well, tossed to the wind. Can't squeeze blood from turnips.
This sounds a lot like the justification for any Ponzi scheme. "If we can only keep getting new investors ("new blood") into my Ponzi scheme, it won't collapse or get into trouble." Local schools are pay-as-you-go systems, too. If the number of children in a district were to drop to zero, then we could close all the schools down and eliminate (nearly) all the school taxes, except for the legacy costs to retired school employees, UGH!).
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Old 10-29-2013, 11:42 PM   #56
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This sounds a lot like the justification for any Ponzi scheme. "If we can only keep getting new investors ("new blood") into my Ponzi scheme, it won't collapse or get into trouble." Local schools are pay-as-you-go systems, too. If the number of children in a district were to drop to zero, then we could close all the schools down and eliminate (nearly) all the school taxes, except for the legacy costs to retired school employees, UGH!).

The taxation for schools is not just within the specific district. A good part of the budget money for the schools is allocated from the state taxes. The district does assesses some add-ons for specific projects. Even in areas with no schools within 10 mile radius (sex offenders territory??!), the tax for schools will not come down that much as long as people in the state are busy making babies.

All I am saying is the sooner one gets to the zen state of ziggy the better -- just be creative and come up with some justification that works for you.

The same is true for SS, Medicare etc. They all have some draw backs, but overall the goal is good, and they do a half way decent job of getting there. The alternative is definitely worse. We can't let perfect be the enemy of the good. Although it doesn't feel like it right now, I am sure ACA will get there soon enough, and for people who couldn't get insurance before it is there already now.
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Old 10-30-2013, 12:08 AM   #57
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Just to bring the issue of school taxes and managing MAGI together, I have become aware of another quirk or inequity.

The payment of local property taxes may be tax-deductible if one itemizes his deductions (Schedule A) on his federal income tax return. This will not lower one's MAGI, however. But if the taxpayer later receives a property tax rebate such as New York's STAR rebate, that is counted as income and is part of the MAGI determination. This means it may not pay to try to bunch one's itemized deductions into a calendar year because by doing so it may increase one's MAGI in the year after the bunched-into year. (I realize that such a tax rebate may be reduced as part of its addition to the MAGI if the itemized deduction did not exceed the standard deduction by much.) But with the steep ACA subsidy "cliff," any benefit from bunching may be blown away by having to increase the MAGI in the year after the bunching takes place.
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Old 10-30-2013, 12:26 AM   #58
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But when does it end? Parents get all those things as you wrote. But they made a lifestyle choice (to have children) which then gets all of these subsidies and tax deductions at the expense of those of us who are childfree. So why can't we childfree get a break on our local school taxes because we are not a burden on the school system? I am not saying that we childfree should pay zero in local school taxes, only that we should get a discount on those local school taxes simply because we are childfree.
At the risk of making you more upset, which I really do not want to do, I can make a counter argument that it takes a lot more than these tax deductions to raise a child, and to bring him/her up to be a productive citizen to work and pay taxes for my and your SS and Medicare.

So, are parents not making a personal sacrifice for the good of society? Should they be rewarded even more? I already mentioned how European nations with low birthrates are doing exactly that.

Even if we do not have Medicare and SS and totally rely on our own, without enough youngsters to provide the services and products that we geezers consume, we will have to pay higher prices for what we will consume. I guess if one goes to a 3rd world country he can get more for his money, but if more people do that, would the US become a huge Detroit?

Although I have two grown children, I used to agree with a Libertarian friend of mine that I should not have to subsidize people with 4 or 5 children. I no longer think the same. I do not know when I changed, but perhaps it was when I started to think about how some developed nations are having trouble with an aging population. Japan is the most obvious example.

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This sounds a lot like the justification for any Ponzi scheme. "If we can only keep getting new investors ("new blood") into my Ponzi scheme, it won't collapse or get into trouble." Local schools are pay-as-you-go systems, too. If the number of children in a district were to drop to zero, then we could close all the schools down and eliminate (nearly) all the school taxes, except for the legacy costs to retired school employees, UGH!).
It is a Ponzi scheme only when the benefits are so generous that it takes many workers to support one retiree and requires that the number of workers keeps growing and growing.

Think about the equilibrium case when the population reaches a stable value, and suppose that we have a stable ratio of 2 workers for 1 retiree. If the benefit is computed properly, the workers can support the retirees forever. I forgot how this benefit ratio would be computed, but if the retiree wants to get the same pay as the worker, and is going to spend as many years in retirement as in his work life, then the tax is going to be very high for the workers. It would not work.

Any retirement system will go broke if it is going to pay a retiree the same pay as when he worked, and with his years in retirement being as long or even longer then his working years. The only way for that to work is for the worker to save 50% or more of his pay.

People will say that they can save less than 50% and investment growth will take care of the rest. However, the economy and the stock market also stop growing when the population reaches equilibrium.
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Old 10-30-2013, 12:27 AM   #59
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Just to bring the issue of school taxes and managing MAGI together, I have become aware of another quirk or inequity.

The payment of local property taxes may be tax-deductible if one itemizes his deductions (Schedule A) on his federal income tax return. This will not lower one's MAGI, however. But if the taxpayer later receives a property tax rebate such as New York's STAR rebate, that is counted as income and is part of the MAGI determination. This means it may not pay to try to bunch one's itemized deductions into a calendar year because by doing so it may increase one's MAGI in the year after the bunched-into year. (I realize that such a tax rebate may be reduced as part of its addition to the MAGI if the itemized deduction did not exceed the standard deduction by much.) But with the steep ACA subsidy "cliff," any benefit from bunching may be blown away by having to increase the MAGI in the year after the bunching takes place.

Holy C%ap!!

Never thought about this. I don't know what the property tax rebate is, as I have never heard of it.. but this is definitely an issue for state tax refunds.

Imagine if you file your returns with an extension on Oct 15th and you are expecting a refund of a few hundred dollars from the state. I can see a possibility where if they time it just right and you get your check at the end of the year you may be out of options and it could push you right off the cliff.

This whole idea of deductions past being resurrected from the grave and showing up as income above the line is perverse.

When in doubt, just have the refund to be applied to the following year!
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Old 10-30-2013, 07:11 AM   #60
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At the risk of making you more upset, which I really do not want to do, I can make a counter argument that it takes a lot more than these tax deductions to raise a child, and to bring him/her up to be a productive citizen to work and pay taxes for my and your SS and Medicare.
[mod edit]

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So, are parents not making a personal sacrifice for the good of society? Should they be rewarded even more? I already mentioned how European nations with low birthrates are doing exactly that.
[mod edit]

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Even if we do not have Medicare and SS and totally rely on our own, without enough youngsters to provide the services and products that we geezers consume, we will have to pay higher prices for what we will consume. I guess if one goes to a 3rd world country he can get more for his money, but if more people do that, would the US become a huge Detroit?
[mod edit]

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Although I have two grown children, I used to agree with a Libertarian friend of mine that I should not have to subsidize people with 4 or 5 children. I no longer think the same. I do not know when I changed, but perhaps it was when I started to think about how some developed nations are having trouble with an aging population. Japan is the most obvious example.
I like how your former self felt. I still feel that way and I am not a Libertarian.

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It is a Ponzi scheme only when the benefits are so generous that it takes many workers to support one retiree and requires that the number of workers keeps growing and growing.
How many is too many? Even two may be too many. [mod edit]

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Think about the equilibrium case when the population reaches a stable value, and suppose that we have a stable ratio of 2 workers for 1 retiree. If the benefit is computed properly, the workers can support the retirees forever. I forgot how this benefit ratio would be computed, but if the retiree wants to get the same pay as the worker, and is going to spend as many years in retirement as in his work life, then the tax is going to be very high for the workers. It would not work.

Any retirement system will go broke if it is going to pay a retiree the same pay as when he worked, and with his years in retirement being as long or even longer then his working years. The only way for that to work is for the worker to save 50% or more of his pay.
But remember that people are living longer and longer, so allowing the benefits calculated 25 years ago to be calculated the same way today is a losing proposition for the system. People are collecting benefits for 20, 25, 30 years now, further straining the system.

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People will say that they can save less than 50% and investment growth will take care of the rest. However, the economy and the stock market also stop growing when the population reaches equilibrium.
What makes you so sure of that? We will still have people buying stuff and consuming services. I disagree.
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