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Tax Exempt Dividends

If dividend income is tax exempt, is that amount included in my total gross income number or is my total gross income reduced by that amount? I need to know this because it affects my Medicare payments.

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Accepted Solutions
rjs
Level 15
Level 15

Tax Exempt Dividends

Your Medicare Part B and Part D premiums are not determined by "total gross income." They are determined by your Modified Adjusted Gross Income (MAGI). As others have said, MAGI for increased Medicare premiums ("IRMAA") is your Adjusted Gross Income (AGI) plus tax-exempt interest. For 2020, 2021, and 2022 AGI is Form 1040 line 11 and tax-exempt interest is Form 1040 line 2a, so you just add those two lines together.


Keep in mind that your premiums are based on your MAGI from two or three years ago. For example, your premiums for 2024 will usually be based on your 2022 tax return, or possibly your 2021 tax return.

 

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6 Replies

Tax Exempt Dividends

See https://www.mcera.org/-/media/files/sites/retirement/medical/medicarehighincome.pdf?la=en

 

Your MAGI is your total adjusted gross income and tax-exempt interest income.

Tax Exempt Dividends

To determine your IRMAA (Income-Related Monthly Adjustment Amounts), your prior year adjusted gross income plus your tax-exempt interest are added together to get your Modified Adjusted Gross Income (MAGI). The MAGI and filing status determine your IRMAA for Part B and Part D of Medicare.

rjs
Level 15
Level 15

Tax Exempt Dividends

Your Medicare Part B and Part D premiums are not determined by "total gross income." They are determined by your Modified Adjusted Gross Income (MAGI). As others have said, MAGI for increased Medicare premiums ("IRMAA") is your Adjusted Gross Income (AGI) plus tax-exempt interest. For 2020, 2021, and 2022 AGI is Form 1040 line 11 and tax-exempt interest is Form 1040 line 2a, so you just add those two lines together.


Keep in mind that your premiums are based on your MAGI from two or three years ago. For example, your premiums for 2024 will usually be based on your 2022 tax return, or possibly your 2021 tax return.

 

Tax Exempt Dividends

@Jack5741 Simply take Line 11 plus line 2A and that is your MAGI for IRMAA purposes.  Your 2023 MAGI will affect your 2025 IRMAA payment, 

Tax Exempt Dividends

Thank you!!

Tax Exempt Dividends

Thank you. This really helps!!

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