Tax and health insurance questions.

[SEPATOPTEN]

My Pension pays me slightly less than 61,000 a year. I have a 401k that I have not drawn from. I have no other income and am single so I am thinking if I take the standard deduction of 12,500 my adjusted gross income for tax purposes would be at around 48,500. Being in the 22% tax bracket I believe that would put my owed federal tax in the vicinity of $6500 per year. I think I am close on that but I am reaching out for confirmation. Also for the purpose of subsidy for the Affordable Care Act would they be using my 61,000 as the number to calculate any possible subsidy or the 48,500 number? They say Modified adjusted gross income on the ACA website which I think keeps me below the threshold of 51, 000 I believe. I do understand the threshold has been raised temporarily but my insurance needs will be after that expires. I am not 62 so I don't collect social security yet.Thanks in advance.

 

[psualt]

You're looking at the $61,000 for MAGI.

Modified Adjusted Gross Income (MAGI)​

The figure used to determine eligibility for premium tax credits and other savings for Marketplace health insurance plans and for Medicaid and the Children's Health Insurance Program (CHIP). MAGI is adjusted gross income (AGI) plus these, if any: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.

• For many people, MAGI is identical or very close to adjusted gross income.
• MAGI doesn’t include Supplemental Security Income (SSI).
• MAGI does not appear as a line on your tax return.

 

[psulongago]

the double My Pension pays me slightly less than 61,000 a year. I have a 401k that I have not drawn from. I have no other income and am single so I am thinking if I take the standard deduction of 12,500 my adjusted gross income for tax purposes would be at around 48,500. Being in the 22% tax bracket I believe that would put my owed federal tax in the vicinity of $6500 per year. I think I am close on that but I am reaching out for confirmation. Also for the purpose of subsidy for the Affordable Care Act would they be using my 61,000 as the number to calculate any possible subsidy or the 48,500 number? They say Modified adjusted gross income on the ACA website which I think keeps me below the threshold of 51, 000 I believe. I do understand the threshold has been raised temporarily but my insurance needs will be after that expires. I am not 62 so I don't collect social security yet.Thanks in advance.

Unfortunately, can't answer your specific questions; I can tell you though, that when you collect SS you will be paying tax on that increased amount consistent with your elevated tax bracket, even though, you already paid tax when you initially earned your money. Another question for the board, is there a way to avoid this double taxation while still accepting the SS payment,

 

[Obliviax]

Unfortunately, can't answer your specific questions; I can tell you though, that when you collect SS you will be paying tax on that increased amount consistent with your elevated tax bracket, even though, you already paid tax when you initially earned your money. Another question for the board, is there a way to avoid this double taxation while still accepting the SS payment,

this is a big reason why people move to TX, FL or TN when they retire. No state income tax.

 

[mattu12]

PA does not tax social security or pension payments. You will need to pay federal tax on 85% of your social security.

If you are close to the MAGI threshold there are lots of things you can do to get under the limit, e.g., a Health Spending Account contribution if your insurance policy is HSA eligible.

 

[psulongago]

this is a big reason why people move to TX, FL or TN when they retire. No state income tax.

Yes, and I'm here but still paying Federal Tax.