Help! with MAGI question - trying to figure out when to stop working

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silvor

Recycles dryer sheets
Joined
May 6, 2013
Messages
260
My goal is to quit before I hit the magic $62,000 for the ACA tax credits.

How do I figure out my MAGI if I keep working a bit? Is it simply the 53000 + ($3900 minus 1379 per check)times number of checks?

Income for 2026 is projected as follows:
$25,000 Dividends in Individual brokerage account
18,000 in Inherited IRA distribution (I can maybe withdraw less $4k)
10,000 bonus this Friday
$53,000

Each check I gross (numbers are rounded)
$3900, I take home $2550

My pretax deductions are:
418 Federal
200 state
263 SS/medicare
25 Dental
108 medical
365 HSA
$1379

Post tax
198 Roth 401k
 
Just don't cut it too close. The hard cliff is back.
 
You can ask your payroll department to be sure, but it looks to me like the calculation is $3900 minus the total of the following:

25 Dental
108 medical
365 HSA

Everything else you listed would be included in AGI.

Also, if you're single and living in the continental 48, then 400% FPL for this year is $62,600.

Also, you might want to check with payroll to see if there are any payouts on termination that would affect your math. The one that comes to mind is unused vacation time. Any unused vacation time paid out would add to AGI.
 
Will you be paid out any vacation time?
 
If it's close, you might want to look at Cobra for 2026. It's expensive, but probably less than full-freight ACA, and you stay on your employer plan. Check pricing with your company insurance.

Oh, you probably want to account for them adding in unused vacation, and/or sick time? Or even accrued bonus for work one YTD - mine did.
 
I you go over the cliff, you might consider making a traditional IRA contribution that gets you just under the cliff.
 
N02L84ER said:
I you go over the cliff, you might consider making a traditional IRA contribution that gets you just under the cliff.
Click to expand...

Good idea. HSA contributions also work if OP gets an HSA ACA plan (which is now all Bronze and catastrophic plans).
 
N02L84ER said:
I you go over the cliff, you might consider making a traditional IRA contribution that gets you just under the cliff.
Click to expand...

So I'm covered by 401k until I quit. Not sure if that would work.

----------------------------------------------------------------------

www.fidelity.com

Modified adjusted gross income (AGI): What it is & how to calculate | Fidelity

Your MAGI is used to determine your eligibility for certain tax deductions and credits. It's important to make sure you're using the right formula each time.
www.fidelity.com

MAGI and IRA deductions

In order to deduct the contributions you make to a traditional IRA, you may be subject to MAGI requirements.

Individuals who are not covered by a workplace retirement plan and married couples filing jointly where neither individual is covered are allowed to deduct the full value of their IRA contribution for the year.
 
silvor said:
So I'm covered by 401k until I quit. Not sure if that would work.
Click to expand...

It depends on your filing status and income level. For a taxpayer filing Single and covered by a workplace plan (like a 401(k)), being able to deduct a trad IRA contribution starts phasing out at an MAGI of $81K for 2026.

Note that MAGI definitions differ. The MAGI for ACA subsidies is defined differently than the MAGI for deductibility of trad IRA contributions.
 
Here's what I would calculate your max paychecks you could take and be under the ACA cliff (assuming filing as Single based on your ACA target).

ItemScenario 1<br>IRA = $18,000Scenario 2<br>IRA = $4,000
ACA income limit$62,600$62,600
Dividends (fixed)$25,000$25,000
Inherited IRA$18,000$4,000
Non-wage ACA income$43,000$29,000
Remaining room for wages$19,600$33,600
ACA income per paycheck
$3900 - ($108 + $25 + $365)		$3,402$3,402
Max paychecks allowed59
ACA MAGI at max paychecks~$60,010~$59,618
 
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