FORM 8962 AND MAGI & AGI

[SMLANZA]

Form 8962 reports my MAGI to be $26K more than my AGI.  Yet, we don't have any of the expenses/deductions that are listed to add up to the MAGI.  Our biggest deduction is our standard deduction.  This is causing us to be 401% above FPL with a full repayment of APTC...

What am I missing here?

[JohnW152]

The most likely explanation is any non-taxable part of your Social Security.  If line 6a of your Form 1040 or 1040-SR is significantly higher than line 6b, this is probably where the additional MAGI amount is from.

Other possible culprits are tax-exempt interest from Form 1040, 1040-SR, or 1040-NR, line 2a, or foreign earned income and foreign housing deduction from Form 2555.

If none of these appear to be the cause, please post back with any other information you might think is relevant.

See Worksheet 1-1, Taxpayer's Modified AGI—Line 2a, in the Instructions for Form 8962 for more MAGI details.

[SMLANZA]

Thanks for your response.

Neither of us taking SS benefits.

No foreign interest, income or property.

My investigation  shows me that MAGI is ALL INCOME, including unemployment compensation which I had. It does not include our standard deduction of $25,900.

Our AGI is taxable income after deductions which DOES include the the standard deduction.

My problem is health insurance APTC.

I get private health insurance through my work that is based on my wages earned.  However, because my wife's employer offers health insurance, my health will not allow her to take them as primary.

She elected to buy a Covered California plan at $647/mo or $7767/yr.  The SLCSP IS 421/mo or 5062/yr and the APTC is 420/mo or 5050/yr. 

Form 8862 uses MAGI to figure out the health insurance burden.  In essence, Form 8862 is using my income to figure out what she should be paying instead of just using her income or our AGI.  Which means my earned allow me to get health insurance through my employer, but my wages penalize my wife by giving her/us a much larger wage above the FPL.  

Last year's FORM 8862 had a box to check to account for anyone approved/taking Unemployment compensation.  If that box was checked, it capped your FPL at 133%.

This year, no such option appears and it is putting us at 401%, even though we made $20K less.  It makes no sense to me.

[MinhT1]

Please that the AGI from which the MAGI is calculated is on line 11 of form 1040, before the standard deduction, and NOT after the standard deduction as you stated above.

Also, the percentage of 133% of the poverty level for those receiving or eligible for unemployment applied in 2021 and has been rescinded for 2020.

One other point is that in 2022, even if your MAGI is above 400% of the poverty level, you still receive some premium tax credit and do not have to repay the totality of the advance premium tax credit received.

Please read this IRS document for more information.

[SMLANZA]

Thank you.

I understood about the MAGI & AGI.  Perhaps I stated it incorrectly.

As far as not having to repay the totality of the APTC--  Turbo Tax Deluxe Edition is telling me that WE DO have to pay back the full amount of APTC. 

Do you know if that is a program glitch?  Or my reality.

[MinhT1]

If your MAGI exceeds 400% of the poverty level, on form 8962, then your contribution to your health premiums is limited to 8.5% of your income and if your have contributed less than 8.5%, then the whole advance premium has to be repaid. If you have paid more than 8,5% of your income in premiums, you get a premium tax credit to bring your contribution to 8.5% and you only repay the excess.

For years 2020 and before, if you exceed 400% then you repay the whole advance premium credit without consideration of your contribution.

[SMLANZA]

Thank you.  I understand.

In my opinion, using the MAGI of both spouses if only one is covered to calculate the insurance burden is cutting, and wrong.  It easily adds a few thousand more dollars.  At least using the AGI of both spouses would take into account  the standard deduction, and be a little less painful. 

Thanks again for your clarity.