Two questions about MAGI and ACA subsidies

[HadEnuff]

The first question has to do with a Roth IRA: I have a very small inherited Roth IRA. I know the distributions are "tax free", but do they have any impact on MAGI? It looks to me that they do get reported "above the line" in the 1040.

2nd question is more complicated, I think.

What about selling a home. We have 2 homes, the one we are selling has been my wife's home, going back 20 years before we were married. It is and has always been, in her name.

If we sell it, she might see a 30K appreciation (long time depressed real estate market). Several questions:
1. Will a capital gain appreciation from sale of house have an effect on ACA MAGI?

2. She's 60 years old. Since she's owned this home since before our marriage, can she take the "one time" exclusion?

3. I have a lake home that we may sell in 10 or 20 years, that I have owned since before we were married. That home is likely to have some significant appreciation, so if she take "her" one time exclusion, will I be able to take mine, later?

We file as "joint-married".

 

[ChiliPepr]

I believe there is no more "one time exclusion", if you have lived in the house for 2 of the last five years a single person can claim $250k and a married couple can claim $500k tax free on the sale.

If you have not lived in the house for 2 of the last 5 years all the gains will be taxed.

 

[Dash man]

I believe there is no more "one time exclusion", if you have lived in the house for 2 of the last five years a single person can claim $250k and a married couple can claim $500k tax free on the sale.

If you have not lived in the house for 2 of the last 5 years all the gains will be taxed.

Plus, if the properties were rented out you have to pay back recaptured depreciation at 25%, whether you took the depreciation or not over the years.

 

[sengsational]

Concerning pulling money from a Roth, it doesn't show up in your income. You've already paid tax on the basis, so obviously that wouldn't show up. And what makes a Roth a Roth is that the gains also come out tax-free, so even the gains don't show on your income.

 

[zinger1457]

The first question has to do with a Roth IRA: I have a very small inherited Roth IRA. I know the distributions are "tax free", but do they have any impact on MAGI? It looks to me that they do get reported "above the line" in the 1040.

You would list the amount of the ROTH distribution on 1040 line 15a but as long as it's a qualified distribution the taxable amount of that distribution on line 15b would be 0 so it won't get added to your MAGI. You will get a 1099-R for the ROTH distribution and should have the Q code in box 7.

 

[HadEnuff]

I believe there is no more "one time exclusion", if you have lived in the house for 2 of the last five years a single person can claim $250k and a married couple can claim $500k tax free on the sale.

If you have not lived in the house for 2 of the last 5 years all the gains will be taxed.

Would the proceeds of the sale get listed on the 1040, and be a factor in the ACA subsidy threshold?

 

[MichaelB]

Would the proceeds of the sale get listed on the 1040, and be a factor in the ACA subsidy threshold?

The proceeds of the sale are not listed on the 1040. What is listed is the net gain from the sale of the house after subtracting the adjusted cost basis and applying the home sale exclusion, if it applies. Also adjusting the cost basis if the house was at any time rented.

 

[HadEnuff]

thanks, all.

 

[joeea]

The first question has to do with a Roth IRA: I have a very small inherited Roth IRA. I know the distributions are "tax free", but do they have any impact on MAGI? It looks to me that they do get reported "above the line" in the 1040.

https://www.healthcare.gov/income-and-household-information/income/