Will Capital Loss Lower MAGI ? a Tax question

[cyber888]

Ok, so I'm planning for retirement, and looking at MAGI income to withdraw to determine ACA subsidy. If I have a capital gains loss of $3000, can that lower MAGI income ? Can charitable contributions also lower MAGI ? Thanks.

 

[cathy63]

Yes, allowed capital losses lower your AGI and hence your MAGI.

Charitable contributions that are taken on the 1040 in tax years 2020 and 2021 are adjustments that also lower your AGI/MAGI. Charitable contributions takeon on Schedule A as a deduction do not affect AGI/MAGI.

 

[cyber888]

Yes, allowed capital losses lower your AGI and hence your MAGI.

Charitable contributions that are taken on the 1040 in tax years 2020 and 2021 are adjustments that also lower your AGI/MAGI. Charitable contributions takeon on Schedule A as a deduction do not affect AGI/MAGI.

Thanks!

 

[RunningBum]

Yes, allowed capital losses lower your AGI and hence your MAGI.

Charitable contributions that are taken on the 1040 in tax years 2020 and 2021 are adjustments that also lower your AGI/MAGI. Charitable contributions takeon on Schedule A as a deduction do not affect AGI/MAGI.

They moved the charitable contributions on 1040 to below AGI/MAGI in 2021, so they no longer lower your AGI/MAGI. AGI is line 11, charitable contributions is 12b. In 2020 charity was part of line 10, with AGI still line 11.

 

[cathy63]

They moved the charitable contributions on 1040 to below AGI/MAGI in 2021, so they no longer lower your AGI/MAGI. AGI is line 11, charitable contributions is 12b. In 2020 charity was part of line 10, with AGI still line 11.

You're right. I hadn't noticed the change for 2021. Thanks.

 

[cyber888]

So, if you projected a higher income for ACA subsidy, and your MAGI is lower due to capital loss ... Do you get a refund from the IRS if you paid more premium for ACA ? Where do you actually get the refund ? Thanks.

You're right. I hadn't noticed the change for 2021. Thanks.

 

[RunningBum]

Form 8962 is where your MAGI is resolved with the subsidy received, and if you're due a larger subsidy it shows up on line 31 of your 1040. If you got too much subsidy for your MAGI, it gets reported in schedule 2, and then line 17 on your 1040.

 

[scrabbler1]

So, if you projected a higher income for ACA subsidy, and your MAGI is lower due to capital loss ... Do you get a refund from the IRS if you paid more premium for ACA ? Where do you actually get the refund ? Thanks.

Form 8962 compares what you should have received as an ACA subsidy to what you actually received. If the former is greater than the latter (your question above), then any untaken subsidy ends up on Form 1040, Line 32/33, as "payments and refundable credits" which will either reduce what you owe or increase your refund (or, in my case, eliminate what I owed and create a refund).

A reduced MAGI is not the only reason someone could get a net subsidy. For me, it was partially the ARP increasing the ACA subsidy midyear with the earlier months including an eventual overpayment.