effects of different filing categories on taxes

[mn54]

now that I am on medicare I plan to start doing roth conversions. DW is still on ACA. We have always filed taxes jointly. Is there a way to file taxes differently, head of household, or seperately, so DW could still be eligible for ACA subsidy while I max out my roth conversions?

[cathy63]

If you're married and don't support any children, then you're not a "head of household". You and your wife could file "married filing separately", but you will need to do some test returns to figure out if it's worthwhile. It looks like you're in MN, which is not a community property state, so it might possibly help; especially if you're not collecting SS yet.

Buy some tax software from last year and do mock returns for separate and joint using this year's numbers to get an idea of what the total tax burden will be in each scenario.

[gwraigty]

Quote:

Originally Posted by cathy63 Buy some tax software from last year and do mock returns for separate and joint using this year's numbers to get an idea of what the total tax burden will be in each scenario.

Or do mock returns without buying tax software.

[Philliefan33]

I don’t think MFS will help you get more ACA subsidy. IIRC the ACA calculations use household income, so if you live together your income still gets included.

[MichaelB]

And to make it more complicated, don't forget to calculate IRMAA on the Medicare premiums.

[braumeister]

Another wrinkle is that many states require you to file your state return with the same status as your federal return. So you need to check that and if it applies, figure it out for the whole tax situation.

[njhowie]

From past experience, my word of advice is to be very sure what you're doing is okay with your state. When I did this about 20 years ago due to a situation which resulted in significant savings, the state would have nothing of it and within weeks sent me a letter indicating I was being audited. It went quickly as I had direct contact with the auditor and this was the only issue they had. They reworked the numbers for joint filing and sent me a bill for what they figured we owed them. At that point, based on how the discussion went, there was no sense in disputing their position. I've never been audited in my life prior to or since then, either state or federal.

[ivinsfan]

Quote:

Originally Posted by mn54 now that I am on medicare I plan to start doing roth conversions. DW is still on ACA. We have always filed taxes jointly. Is there a way to file taxes differently, head of household, or seperately, so DW could still be eligible for ACA subsidy while I max out my roth conversions?

For this to work for ACA purposes I think you need to get a divorce.....

[ivinsfan]

Quote:

Originally Posted by Philliefan33 I don’t think MFS will help you get more ACA subsidy. IIRC the ACA calculations use household income, so if you live together your income still gets included.

Not sure this is true I know a few posters here say their SO gets heavily subsidized ACA and they don't. Perhaps they have another address...? IDK.

[SecondCor521]

Looking through the instructions for Form 8962, it appears that generally if you're married and file MFS, neither spouse would qualify for ACA subsidies:

"Married filing separately. If you file as married filing separately and are not a victim of domestic abuse or spousal abandonment (see Exception 2—Victim of domestic abuse or spousal abandonment under Married taxpayers above), then you are not an applicable taxpayer and you cannot take the PTC."

Page 5 of https://www.irs.gov/pub/irs-pdf/i8962.pdf.