@LancoQuestions wrote:
End result -- because IRA withdrawals are considered "Retirement income" I needed to pay back the $7000 that I had received as healthcare credits. The government bases the healthcare credits on current poverty level. Such a poor healthcare system for those of us who have worked hard all our lives.
Yes. Unlike many tax provisions that have a gradual phase-out, the PTC is more like a cliff. This is the bad design I referred to above. The only way to change it would be through Congress passing a new law that modifies the Affordable Care Act or replaces it with something new.
When you are right on the edge, you need to do some careful tax planning to avoid that cliff.
Lastly, I will point out just in case, that if the withdrawal was made less than 60 days ago, you can return some of all of the money to the same or a different IRA -- this is called a rollover -- and I don't believe it would count as income against the PTC. But that would only help you if you made the withdrawal in the last few days of December.
