wxrbumo
New Member

My income is social security and dividends. The ObamaCare subsidy needs to be repaid (salary $4000 too much). Can I make an IRA contribution to reduce income.

I am retired and have social security and dividernds  for income (no W2 or taxable wages).  I withdrew more than I should have from my IRA last year and the health care subsidy on my tax return needs to be repaid.  I want to know if I can make a contribution before April taxes (in 2018) to reduce my income.

 

Retirement tax questions

No, you can only make an IRA contribution if you have "earned income" from wages or self-employment.

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Retirement tax questions

Further, Obamacare penalties are based on Modified AGI, so contribution (even if legal) won't help ...

Retirement tax questions

We got snagged on Obamacare premium paybacks the same way ...  I took a distribution from my IRA such that I would have little or no tax to pay but, the premium subsidy was then voided and the premium payback amount is added to my taxable income.   Now, we've got a big tax bill and - just to rub salt into the wound - a tax penalty for not withholding enough from the IRA distribution.    The whole thing is pretty insidious.