Updated IRMAA estimates for 2025

[JoeWras]

Correct - 2028 IRMAA will be based on your 2026 return/income that you'll file in 2027.

Thanks!

 

[audreyh1]

In 2026, I'll plan to stay at least $40k below IRMAA. I want no surprises.

The plan would be to do our last big Roth conversion in 2025 tax year. That should be safe, correct?

$40K is pretty conservative. You don’t know the 2028 IRMAA levels in 2026. But by late that year you’ll know the 2027 levels which should be higher and are very likely safe, and some sites will project the 2028 levels.

If your last Roth conversion is 2025 then yes I’d say your safe.

 

[JoeWras]

$40K is pretty conservative. You don’t know the 2028 IRMAA levels in 2026. But by late that year you’ll know the 2027 levels which should be higher and are very likely safe, and some sites will project the 2028 levels.

If your last Roth conversion is 2025 then yes I’d say your safe.

OK, OK. I'll loosen up and make sure not to hit the post too close, say at least $15k. Next year will be easier for me to estimate my Q4 income. It is a bit confusing this year since I transferred a lot of ETFs from Vanguard to Fidelity.

 

[Chuckanut]

I don’t think I would be upset about paying Aunt IRMAA if I could make an income that was substantially over an IRMAA limit on a regular basis. What would upset me would be to pay Aunt IRMAA because I am just a few dollars over the limit. That would be painful.

In any case, I have done all I can to keep IRMAA off my lawn.

 

[JoeWras]

I don’t think I would be upset about paying Aunt IRMAA if I could make an income that was substantially over an IRMAA limit on a regular basis. What would upset me would be to pay Aunt IRMAA because I am just a few dollars over the limit. That would be painful.

In any case, I have done all I can to keep IRMAA off my lawn.

And don't create an unnecessary self-inflicted wound.

 

[Car-Guy]

OK, OK. I'll loosen up and make sure not to hit the post too close, say at least $15k. Next year will be easier for me to estimate my Q4 income. It is a bit confusing this year since I transferred a lot of ETFs from Vanguard to Fidelity.

10 to 15k is about my cutoff too. Why? Because you never know (until it's to late) if you forgot something. You'll find it when preparing and filing your tax return. Been there and done that.

 

[audreyh1]

Knowing if you forgot something is the trickiest part. For me I’m giving myself $5K extra headroom compared to the projected IRMAA levels for 2025 assuming 0% inflation. The bogeyman in my calcs is an unknown foreign tax credit and associated additional taxable income that I don’t receive but gets added to my AGI. I don’t find these values out until after the end of the year. These international funds have become such a royal pain in the patootie.

I’ve been very careful so far in my projections, but it’s quite complex.

I’ve been taking some gains this year to get closer and not go over a target level. This is to reduce future income from some legacy active funds. I’m still carefully making moves and waiting for distributions in Dec to finalize stuff.

Ha ha just last night I remembered that I received $16 in jury duty pay in Jan. At least that’s a tiny number.

 

[braumeister]

I’m giving myself $5K extra headroom compared to the projected IRMAA levels

I try to stay at least 5% under an IRMAA tier, because I don't trust myself to get it exactly right.

 

[Koolau]

I try to stay at least 5% under an IRMAA tier, because I don't trust myself to get it exactly right.

I think 5% should be good unless your income is pretty lumpy and difficult to predict. I'm pushing the limits this year as it's a big charity year. I guess we'll see how it all turns out. Good luck to all of us.

 

[Car-Guy]

Well I probably blew it early this morning. I hit a ~10k jackpot at a Casino that will "likely" push me in the first tier. Well if that turns out to be true, at least now I have some breathing room before I get to tier two.

Stuff happens!

 

[dmpi]

Well I probably blew it early this morning. I hit a ~10k jackpot at a Casino that will "likely" push me in the first tier. Well if that turns out to be true, at least now I have some breathing room before I get to tier two.

Stuff happens!

Congratulations! Being a gambler makes it inherently difficult to predict and control your income. Was it on slots or table games?

 

[Car-Guy]

Congratulations! Being a gambler makes it inherently difficult to predict and control your income. Was it on slots or table games?

Actually it was multi hand/deck video poker game but they count that like a slot machine.

 

[Finance Dave]

We hit IRMAA and will be paying higher for DW's Medicare (I'm not yet on Medicare) for 2024. The issue was that we sold 3 rental properties last year and thus our AGI was quite high. I was expecting the IRMAA hit, but property values had skyrocketed here, we had tenants moving out, I did all the work on the rentals and I needed knee surgery...so the time was just right to sell. We made an enormous gain on each house....we averaged paying around $65k for them and we sold them for $162-$180k....so we are happy.

The IRMAA will only be for one year. We also wrote a huge tax check ($62k) to the IRS early this year, but that also was expected...no complaints.

Next year a lot will change for us, as the rentals will be fully off the tax return (we sold one in 2023), DW starts collecting SS late in the year, and our income will be very minimal (we'll take a modest amount from TIRAs). I have been paying a CPA to do our taxes due to the rentals and owning a handyman business...but the handyman business is easy accounting (I'm the only employee and revenues are usually less than $10k/year) so I'll start doing our own taxes for 2024 tax year.

Finally things are beginning to settle down.

 

[audreyh1]

Yeah, best to get it out of the way before both of you are on Medicare.

 

[Sunset]

We hit IRMAA and will be paying higher for DW's Medicare (I'm not yet on Medicare) for 2024. The issue was that we sold 3 rental properties last year and thus our AGI was quite high. I was expecting the IRMAA hit, but property values had skyrocketed here, we had tenants moving out, I did all the work on the rentals and I needed knee surgery...so the time was just right to sell. We made an enormous gain on each house....we averaged paying around $65k for them and we sold them for $162-$180k....so we are happy.

The IRMAA will only be for one year. We also wrote a huge tax check ($62k) to the IRS early this year, but that also was expected...no complaints.

Next year a lot will change for us, as the rentals will be fully off the tax return (we sold one in 2023), DW starts collecting SS late in the year, and our income will be very minimal (we'll take a modest amount from TIRAs). I have been paying a CPA to do our taxes due to the rentals and owning a handyman business...but the handyman business is easy accounting (I'm the only employee and revenues are usually less than $10k/year) so I'll start doing our own taxes for 2024 tax year.

Finally things are beginning to settle down.

I would appeal the IRMAA decision, as there is no cost to do so, and this one time event is due to retiring from being a landlord. Appeals based on "Loss of income-producing property" are allowed.

https://www.ssa.gov/forms/ssa-44.pdf

 

[Koolau]

Actually it was multi hand/deck video poker game but they count that like a slot machine.

I guess you could "lose big" and deduct it, right?

 

[CRLLS]

We've been dancing the IRMMA dance the last few years with maximizing Roth conversions. None in our plans this year. It seems like every year something different throws a monkey wrench in our "income" that wasn't there the year before. So far, we've been able to avoid it. This year's income was different by the inherited RMD and some T-bills. Both, new to us. That makes it difficult to estimate income based off of last year's TurboTax "What-if" form. I did take a wild stab at it. We'll take enough to pay the tax on some large dividends we received this year. Next year's RMDs will definitely break us into the 1st tier, maybe higher. We'll have to see what 2024 brings.

It is slightly comforting reading about others dealing with IRMMA. I never would have though that I would be in this situation 10-20 years ago.

 

[Car-Guy]

I guess you could "lose big" and deduct it, right?

Sure, but it doesn't help with IRMAA, the winnings are still counted as income.

 

[SecondCor521]

Sure, but it doesn't help with IRMAA, the winnings are still counted as income.

Well, losses are deductible, but only on Schedule A (and therefore "wasted" most of the time because people don't itemize), and only to the extent of winnings.

So to the extent that one has losses and itemizes and has winnings to offset, those gambling losses increase the itemized deduction total, which in turn reduces AGI, which in turn reduces MAGI and can in turn reduce IRMAA.

 

[oldtimer]

Well, losses are deductible, but only on Schedule A (and therefore "wasted" most of the time because people don't itemize), and only to the extent of winnings.

So to the extent that one has losses and itemizes and has winnings to offset, those gambling losses increase the itemized deduction total, which in turn reduces AGI, which in turn reduces MAGI and can in turn reduce IRMAA.

Gambling losses increase (up to gambling gains) the itemized deduction total, which in turn reduces taxable income, not AGI nor MAGI. Gambling losses can only help reduce AGI if one makes their living as a professional gambler (Schedule C).

 

[SevenUp]

Gambling losses increase (up to gambling gains) the itemized deduction total, which in turn reduces taxable income, not AGI nor MAGI. Gambling losses can only help reduce AGI if one makes their living as a professional gambler (Schedule C).

Or uses the "per session" method to report only the net winnings "per session" (e.g., for a given day). That can reduce AGI.

P.S. I know 2Cor521 knows that itemized deductions don't reduce AGI - we all have brain spasms from time to time....

 

[SecondCor521]

Gambling losses increase (up to gambling gains) the itemized deduction total, which in turn reduces taxable income, not AGI nor MAGI. Gambling losses can only help reduce AGI if one makes their living as a professional gambler (Schedule C).

Or uses the "per session" method to report only the net winnings "per session" (e.g., for a given day). That can reduce AGI.

P.S. I know 2Cor521 knows that itemized deductions don't reduce AGI - we all have brain spasms from time to time....

Whoops. Yup. Brain spasm.

I shouldn't post tax advice when I'm sitting in an airport because I missed my flight. Because of another brain spasm.

Nice thing is if you're wrong around here, people will shortly be along to correct me. Thanks.

 

[Out-to-Lunch]

The plan would be to do our last big Roth conversion in 2025 tax year. That should be safe, correct?

You may recall that I am the same age (birth year) as you. So, not to mention the IRMAA angle, there is the fact that, under current law, 2025 is the last year of the lower TCJA rates. So I am planning my last biggish conversions in 2024 and 2025 for both reasons of both IRMAA and rates.

(I realize that the law can change.)

 

[Cobra9777]

Hi all. IRMAA rookie here. Happy to find this thread and the TFB site.

DW starts Medicare in 2025. I'm a year later. As I understand it, our 2023 MAGI needs to be below $210K-ish to safely avoid IRMMA in 2025. Though $212K seems pretty safe as well.

I've got a fairly solid estimate for 2023 taxes, pending the final Roth conversion. I doubt AGI will vary more than about $2K vs my current estimate.

Given all that, I assume my Roth conversion amount should be based on target AGI of around $208K (no tax-exempt interest).

Just looking for some confirmation that I've somewhat figured this out. Thanks.

 

[SecondCor521]

Hi all. IRMAA rookie here. Happy to find this thread and the TFB site.

DW starts Medicare in 2025. I'm a year later. As I understand it, our 2023 MAGI needs to be below $210K-ish to safely avoid IRMMA in 2025. Though $212K seems pretty safe as well.

I've got a fairly solid estimate for 2023 taxes, pending the final Roth conversion. I doubt AGI will vary more than about $2K vs my current estimate.

Given all that, I assume my Roth conversion amount should be based on target AGI of around $208K (no tax-exempt interest).

Just looking for some confirmation that I've somewhat figured this out. Thanks.

Sounds right to me. The other thing to look out for, which might have been mentioned upthread, is other 2023 income that you might have forgotten about.