Aca question.. i qualify for aca and want to buy an ira to lessen my agi and my aca liability. i can buy a large enough ira it would take me below my fpl. if i do that
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest second stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
New Member

Aca question.. i qualify for aca and want to buy an ira to lessen my agi and my aca liability. i can buy a large enough ira it would take me below my fpl. if i do that

if i take my agi below the poverty level will that also disqualify my aca eligibility as i went off the aca clift?
1 Reply
Level 6

Aca question.. i qualify for aca and want to buy an ira to lessen my agi and my aca liability. i can buy a large enough ira it would take me below my fpl. if i do that

What you're wanting to do is an excellent planning strategy.  And, as long as your income is not below the range the law set for savings on a Marketplace insurance plan, it may work for you.

Here are the Marketplace ranges to see how Federal Poverty Levels are used to determine eligibility for reduced-cost health coverage:

  • Income between 100% and 400% FPL: If your income is in this range, in all states you qualify for premium tax credits that lower your monthly premium for a Marketplace health insurance plan.
  • Income below 138% FPL: If your income is below 138% FPL and your state has expanded Medicaid coverage, you qualify for Medicaid based only on your income.
  • Income below 100% FPL: If your income falls below 100% FPL and your state hasn't expanded Medicaid coverage, you won't qualify for either income-based Medicaid or savings on a Marketplace health insurance plan. You may still qualify for Medicaid under your state's current rules.

Also, for ACA you need to look at your Modified Adjusted Gross Income.  The Marketplace definition of MAGI is adjusted gross income (AGI) plus these:  untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.  

If you make a Traditional IRA contribution and reduce your MAGI below 100% of the FPL you will not be eligible for ACA.  And if your income is below 138% FPL, then you are exempt from any penalty for not having insurance coverage if you live in a state that does not offer Medicaid.

For 2017 and 2018, your total contributions to all of your traditional and Roth IRAs cannot be more than:

  • $5,500 ($6,500 if you’re age 50 or older), or
  • your taxable compensation for the year, if your compensation was less than this dollar limit

See the TurboTax article What Is the Difference Between AGI and MAGI on Your Taxes? for more information.

[Edited 2.7.18 | 2:47 PM]

Dynamic Ads
v
Privacy Settings