Do HSA and IRA Contributions Really Increase APTC?

[Youngster]

I am puzzled. Trying to do a little planning. My understanding is that HSA and IRA Contributions are deducted to come up with MAGI for purposes of the PTC. However, I am having trouble envisioning this when looking at IRS Form 8962.

My APTC is based on estimated earning only, with no consideration for IRA or HSA contribution deductions.

Looking at IRS Form 8962, there are five parts (I think only the 1st 2 parts are pertinent). The first part would appear to be the one that allows reconcilliation on the APTC; however, based on Part II, the only consideration appears to be columns (e) and (f) (I need to do the monthly calculations). Part II appears to tell one what amount was overpaid but does not appear to take into consideration MAGI. The state health isurance exchange that prepares form 1095-A will have no idea what my actual MAGI may be.

What am I missing here? Anyone know how this works? I am confused and having a heck of a time figuring it out.

 

[pb4uski]

MAGI, Line 2a of Form 8962, starts with Form 1040 AGI, which is after HSA and deductible IRA contributions. The MAGI is part of the calculation of the annual/monthly family contributions.

Have you looked through the instructions to Form 8962?

 

[Youngster]

Thanks. I have the MAGI figured out. I did look through the instructions.
My issue is understanding how to reconcile when the MAGI is lower than the figure used by the state exchange (did not consider deductions) to calculate the APTC.

 

[rodi]

I'm not sure what state you're in. On coveredca.com (California's exchange) they ask about HSA contributions in the income verification section.

 

[Youngster]

I don't know if they asked when I first applied. If they did, I did not have an estimate. When I callled them to advise of additional income, they said they would consider that, but not the HSA contributions.

 

[pb4uski]

Thanks. I have the MAGI figured out. I did look through the instructions.
My issue is understanding how to reconcile when the MAGI is lower than the figure used by the state exchange (did not consider deductions) to calculate the APTC.

IIRC from doing my son's return last year (he is receiving a subsidy) the subsidy that you should have received for the year is recalculated based on your actual income and any difference increases or reduces your refund. Luckily, his income was pretty close to what we had estimated and his refund was reduced by a whopping $7. It is all on the Form 8962.

If you actual MAGI is lower than what the state exchange used then it would increase your refund.

 

[Youngster]

Thanks. I think I may have figured it out. It helps if I read the smaller print more carefully. It will be columns (c) and (d) that I must figure out I don't think that will be on from 1095-A), and column (c) comes from the amount on line 8b that takes actual MAGI into account.

Thank you both pb4uski and rodi for making me think this through better. Of course, we will see what the tax guy says. I may be missing other issues. Complicated stuff, for me anyways.

 

[pb4uski]

Just remember, the concept is to true-up what you actually received in subsidies to what you should have received given your actual income.... conceptually the same as the way the tax return trues up what you actually paid or had withheld to what you should have paid given your actual income.