I have a question about MAGI and the ACA. If I make an 2014 IRA conversion ( regular to ROTH) and this is reported as taxable ome,

If I make a 2014 IRA conversion (regular to ROTH) will this income be used as part of calculating my MAGI for ACA and subsidy eligibility?  Some references have suggested that ira distributions are not counted as part of MAGI.

I am confused by the IRS definitions of MAGI as they seem to define it differently for varied programs.

I need to increase my income in 2014 to meet the 100% threshhold to qualify for the subsidy and thought the IRA conversion is one to do it if the income will be counted.

I have been using form 1040A. Can I report the conversion income on 1040A or will I have to go to 1040.

Thanks to all.

    Q: If I do a partial conversion of an amount from [a Traditional] IRA to a Roth IRA, does that amount count in the math for MAGI for Obamacare?


    A: Yes; Both full and partial conversions are taxable income and part of your MAGI as defined above. Thus, if you're contemplating a conversion, and seeking to minimize change to your estimated income for ACA purposes, it would be best to wait until near the end of the (tax) year, so that the taxable conversion amount (when added to other income) keeps close to your estimate ...

    • But if you do the conversion in 2013, it won't affect the Premium Assistance Tax Credit.  The credit is based on your 2014 income.

    MAGI does include all IRS distributions so therefore a IRS conversion would be included in MAGI.  

    MAGI for ACA is

     the adjusted gross income on your tax return 
    • Plus non-taxable portion of social security benefits,
    • Plus Tax Exempt Interest
    • Plus Foreign Earned Income and Housing Expenses
    • Less (for Medicaid eligibility) Scholarships used for education purposes and not living expenses
    • Less (for Medicaid eligibility) certain American Indian and Alaska Native income
    • Less (for Medicaid eligibility) an amount received as a lump sum is counted as income only in the month it is received.
    IRS conversion can be reported on a 1040A, you do not have to use a 1040.

    Hope this clears things up.

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