ACA tax question regarding selling stock at start of year, moving to medicare in July

[Patricia Lyn]

I’ve searched the forums and can’t seem to find the answer to our situation.
My DH and I are both turning 65 in 2024; he in July and me in November. We are both retired and on ACA and have estimated our 2024 income that includes selling a long term capital gains stock for the bulk of our living expenses and using SS for the rest (we both take our SS).
We plan to sell our stock in January. My question is:
Do we need to report higher income for the month of January to Healthcare.gov? Or do they just take the amount you actually earned that year and figure it all out when we file our taxes for 2024?
I know we have to file a quarterly return after selling the stock to avoid a penalty.
Also, since my husband will be quitting ACA for Medicare in July, will the stock sale mess up my subsidy in any way? Or is it all just figured out using our estimated yearly income and settled up at tax time?
Thanks for your time

 

[finnski1]

I’ve searched the forums and can’t seem to find the answer to our situation.
My DH and I are both turning 65 in 2024; he in July and me in November. We are both retired and on ACA and have estimated our 2024 income that includes selling a long term capital gains stock for the bulk of our living expenses and using SS for the rest (we both take our SS).
We plan to sell our stock in January. My question is:
Do we need to report higher income for the month of January to Healthcare.gov? Or do they just take the amount you actually earned that year and figure it all out when we file our taxes for 2024?
I know we have to file a quarterly return after selling the stock to avoid a penalty.
Also, since my husband will be quitting ACA for Medicare in July, will the stock sale mess up my subsidy in any way? Or is it all just figured out using our estimated yearly income and settled up at tax time?
Thanks for your time

Others will probably have more definitive answers but I'm pretty sure you'll be fine and just reconcile it all at tax time.
Shouldn't need to report anything for January as the total annual is what matters.

 

[sengsational]

The PPACA application is supposed to be filled out as accurately as possible, and if the estimate equals the actual, the advance premium tax credit (the discount you get off your premium now) will equal the premium tax credit on your tax return. If you under estimate your income, the discount will be "too much", so you'll have to pay it back at tax time.


The size of your family is the same for the whole year, number of person-months that are ACA eligible goes into the calculation. If you look at the tax form that reconciles the PTC, it might shed some light on how it works.

 

[cathy63]

I’ve searched the forums and can’t seem to find the answer to our situation.
My DH and I are both turning 65 in 2024; he in July and me in November. We are both retired and on ACA and have estimated our 2024 income that includes selling a long term capital gains stock for the bulk of our living expenses and using SS for the rest (we both take our SS).
We plan to sell our stock in January. My question is:
Do we need to report higher income for the month of January to Healthcare.gov? Or do they just take the amount you actually earned that year and figure it all out when we file our taxes for 2024?

Since you already provided the estimate of your annual income, that should include the stock sale that you know is coming up and there's no need to report anything else. ACA is not based on monthly income at all, only your annual income. If you didn't include the stock sale when you estimated your total annual income, then you should update it, otherwise you'll end up repaying more of your subsidy when you file your tax return.

I know we have to file a quarterly return after selling the stock to avoid a penalty.

If the total of your 2024 withholding and other tax payments will be at least as much as your 2023 tax you do not have to pay quarterly estimated taxes in 2024. You can wait and pay the amount due in 2025. If your 2023 income is over $150K, then your 2024 tax payments need to be 110% of your 2023 tax.

Also, since my husband will be quitting ACA for Medicare in July, will the stock sale mess up my subsidy in any way? Or is it all just figured out using our estimated yearly income and settled up at tax time?
Thanks for your time

Your subsidy will go down, or possibly even be eliminated when your husband starts Medicare and you switch to your own ACA plan. This has nothing to do with the stock sale though. Under ACA your monthly insurance payment is based on your household's annual income; and since that doesn't change when one person starts Medicare, your monthly payment stays the same. E.g. if you are paying $500/mo for insurance for both of you and the premium is actually $1200, you have a $700 subsidy. You'll still be paying $500/mo even when the premium drops to $600 for just you, but your subsidy will then only be $100.

 

[Patricia Lyn]

Thank you

Thanks to all of you who replied. It helped us out a lot!