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The next level of what? Immorality? Everyone does NOT cheat and scam. Our accountant would not sign our forms, nor should she, if something was amiss. Cheaters and/or liars are, IMO, morally bankrupt.</p>
<p>The people near the 400% mark who end up over really aren’t that worse off. The subsidies are indexed to income, so someone who was at the 350% mark (guess) who went over and had to repay the subsidies is not any worse than the person who was a 100% and ended up at 200% - some is going to have to be repaid. They had to do it this way because poorer people just don’t have the money to pay the premium in advance and then get a big tax refund which is the way most credits work. Want the credit for buying a fuel efficient car? Buy the car and get reimbursed. Want new energy efficient windows? Put them in and take a credit after you do.</p>
<p>@bookreader, there is no “negative consequence” for incorrect guessing. You buy insurance and your premium costs $X. If your income is low enough, you may qualify for a year end tax credit. The federal government is nice enough to offer to pay that credit in advance, if you choose, by paying part of your health care premium, based on what you say you think your income will be. If you make a mistake and overestimate your income, you’ll get an extra credit come tax time. On the other hand, if you make a mistake and underestimate you income, the following April you will owe, at most, the same amount that you owed the insurance company in the first place. But you’ve come out ahead – why? because the US government gave you an interest-free loan. </p>
<p>If the reason you can’t be sure of income is because you are self-employed, then it’s a simple cash flow and cash management problem. It’s not really any different than the decision you might face if you are considering signing a business lease, hiring an employee, or investing in new equipment: you make business decisions based on what you expect your income be. And because you are in business, if the premium subsidy is high enough, you can use that interest-free loan to your advantage – for example, by investing in the money that you save on insurance in something that promotes your business. </p>
<p>But the credit isn’t some sort of entitlement that is being taken away from you as a penalty for guessing the wrong amount of income. It is potential benefit that you may or may not qualify for – just like many other tax credits that phase out after certain income levels.</p>
<p>“The next level of what? Immorality? Everyone does NOT cheat and scam. Our accountant would not sign our forms, nor should she, if something was amiss. Cheaters and/or liars are, IMO, morally bankrupt.”</p>
<p>As usual a complete misunderstanding of my post since I said nothing about cheating or lying anywhere.</p>
<p>Its not a misunderstanding, is a reference to other people who have commented here. Its not all about you.</p>
<p>But, FWIW, there is a special place for people who spend their time looking for every “legal” tax loophole. I wish them years of audits and a large red flag on their file.</p>
<p>Oh, okay. Well, you are responding to a quote box with part of my post in it and asking questions so I figured that was what you were commenting on and it was directed at me. But, maybe not. Alrighty. </p>
<p>Once again, people do tend to expound or add another thought. What a concept.</p>
<p>Yes, and it’s such a friendly forum, too. 
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<p>For our family that $1 over 400% would result in us repaying more than $12000. That is more than 10% of our income. My H is self employed so income varies. We will be putting money in IRAs if we are close to going over. People who are employed by a corporation can contribute many thousands of dollars more to a 401 k and not pay taxes on that. If our junior kids get internships this summer that will add another wrinkle as their income will need to be included. But that would be well worth it! </p>
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<p>You’re forgetting the cliff.</p>
<p>Let’s look at the numbers for my family of three. We wouldn’t get a subsidy at 100% of FPL because we’d be on Medicare, but the difference between the subsidy for us at 150% of poverty vs 200% of poverty would be about $3000.</p>
<p>The difference between us at 350% of poverty and 401% of poverty would be $14,000.</p>
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<p>That’s a hypothetical $1 only. Surely a self-employed person who found that their income was $1 over the mark come tax time would do a little digging and manage to find some overlooked receipt for a business expense. Self-employed people have enough control over their income and expenses that the realty is probably going to be people earning many thousands of dollars over and above the cutoff – especially given the fact that insurance premiums themselves reduce the AGI. That is, if there are $12000 in subsidies, then there must be something over and above $12000 for the self-employed health insurance deduction. Then there’s the 1/2 self-employment tax deduction, retirement deductions, etc. A self employed individual could easily have a net income of $75K and an AGI below the ~$45K threshold. </p>
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Yes, it is, for the large majority.</p>
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such a gracious comment. And amusing that a poster who has been on the forum for a month or so, that somehow “as usual” their posts seem to be misunderstood. Really a “new” poster? :^o </p>
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That makes sense, calmom. This is true for many aspects of tax filing. When all is said and done, filling out tax forms, we we either get a credit or we owe.This seems no different. </p>
<p>credit= refund for tax filing, to clarify above.</p>
<p>Ok. I just read this thread and think I made a big mistake for 2014. I didn’t include my son’s income when filled out our state application in 2014. My son worked this summer and is working this semester. Furthermore, he is basically on a full ride at his school; therefore, his room and board is taxable income. He buys his health care coverage through the university. I didn’t realize I was supposed to include his income when applying. When I was applying, the application only asked for my income. Of course, I obviously misread the fine print which said to include his income. Will a tax penalty apply if I don’t make an estimated payment by 01/15/2015? My subsidy is definitely more than 10% of my normal overall tax liability. This is really bad news for me. Any input would be greatly appreciated. </p>
<p>“The federal government is nice enough”</p>
<p>Best laugh of the morning. Anyway, my only point here and it comes from a good bit of common sense and an insurance broker is that there are going to be people who made expensive mistakes and other people who make decisions based on what gives them the best deal under the law. His job is to help them figure that out so nothing about this is remotely surprising or controversial.</p>
<p>Momofmusician1, let’s see if we can figure out a way to get you out of this pickle.</p>
<p>I take it that without your son’s income, your MAGI for your family of two is less than 400% of poverty, which in your case would be $62,920, but with his taxable income, you would go over that limit. And the difference between a subsidy and no subsidy would be something like $5000 a year. </p>
<p>What if you didn’t claim your son as a dependent, but instead had him file by himself? That might be cheaper. You’d have to get your income under $46,680, so that you’d still be eligible for a subsidy. Is there a way to put some of your money in tax-sheltered accounts so it is not subject to tax? I suggest working out your tax eligibility both with and without him as a dependent. </p>
<p>I also suggest talking to a tax professional, if that is possible.</p>
<p>Jeez, I hate the cliff at 400% of FPL. It’s terrible tax policy.</p>
<p>Your S could put funds into an IRA, as could you and H. Talking to a CPA could be well worth not having to pay a huge amount you didn’t expect. </p>
<p>Cliffs are generally bad policies, Cardinal Fang. Soft landings with phaseouts are a lot better, but Congress seems to have a problem with that. </p>
<p>On the good Obamacare front, I signed up for my new coverage a week ago Saturday and got my new insurance card in the mail on Monday this week along with the formulary of no-charge preventive drugs. The first premium has been withdrawn from my account already, so looking good so far. </p>
<p>My son signed up for Kaiser a few weeks ago. He has his card already.</p>
<p>Mr. Fang and I are waiting to find out whether the insurers we’re looking at cover our doctors. Sutter and the large insurers are playing chicken right now. We’re going to keep COBRA until the enrollment deadline, hoping that Sutter will have made up its mind by Valentines Day whether treatment delivered on Jan. 1 is covered by Health Net or Blue Cross. </p>
<p>I hate this stupid game of chicken. The deadline to say what doctors are included in a plan should be the first day of enrollment, not March 1st.</p>
<p>Thanks for the suggestions Cardinal Fang. I am going to run the numbers both ways in Turbo Tax and see what happens. I have always done my own taxes as my tax return has always been pretty straightforward, but this may be the year to consult a professional as I don’t want to be penny wise and pound foolish.</p>