Penalties for Mistakes on Estimated Income?

[CoolChange]

Let me start by admitting that I have only read a small fraction of what has been published regarding the new ACA regulations; so, this may be a very simple inquiry to answer. But, I have not found anything definitive yet.

If someone retires at the end of this year, or any year, from a relatively high income position intending to manage MAGI for the coming year at +/-300% FPL, I believe, from my limited reading both here and elsewhere, that there will be procedures in place to document the reason for anticipated change in income (retirement/unemployment) to obtain subsidy/rate reduction. Please correct this assumption if needed.

Then, assume things change in coming year and something comes along that is just too interesting and lucrative to pass up which pusses MAGI will above 500% FPL. While I realize any subsidies would have to be reimbursed, my question is if any penalties/fines/etc. would be levied in this situation; and, if so, what would be the magnitude?

Any insight, ideally with supporting official links, on this would be appreciated.

 

[rbmrtn]

I think you are good assuming you haven't deliberately falsified something. No different that getting a large increase in income and having to pay additional on that amount.

There is new IRS site for implementation regs Affordable Care Act (ACA) Tax Provisions

Similar to estimated tax payments, sounds like you should report changes to your exchange and they make adjustments

Change in Circumstances: If you are receiving advance Premium Tax Credits to help pay for your insurance coverage, you should report changes such as income or family size to your marketplace. Reporting changes will help to make sure you are getting the proper amount of assistance

 

[Animorph]

Would they possibly be the same as normal tax underpayment? Seems like if you paid enough estimated/withheld taxes to cover your taxes and the excess subsidy you should be in good shape.

 

[CoolChange]

Excellent. One less thing to lose sleep over during the planning process.

Thank you very much.

 

[joe8012]

With an income at 300% poverty level, your subsidy can be quite large depending on your age. For a couple in their early 60's, it can be above $10,000.