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What if income tax return we will file for 2014 will be less than poverty line?

 
 
Reply Fri 14 Nov, 2014 02:26 pm
We have health coverage for my mother and our reported income to marketplace is 12k but what if it falls below 100% poverty line of $11490 (we are not sure yet as her income is not consistent) ..and if we file income tax return for less than 100% poverty line she will not be eligible for premium tax credits for year 2015 but what will happen to tax credits she already received for year 2014???? Will IRS ask her to pay it back to IRS?
 
Peter Frouman
 
  3  
Reply Fri 14 Nov, 2014 09:05 pm
@curiousv,
You should consult a tax professional to get a definitive answer but it's quite possible that any required repayment of advance premium tax credit payments will be capped at between $300 and $600. $600 is the repayment cap for most taxpayers with household income below 200% of the Federal poverty line but apparently there some circumstances when it is capped at $300 and there are also circumstances in which no repayment would be due. The regulations at http://www.gpo.gov/fdsys/pkg/FR-2012-05-23/pdf/2012-12421.pdf have some more information about this.

Also, even if her 2014 income is below 100% of the Federal poverty line, she might still be eligible to enroll in and get premium tax credits for a policy that starts in 2015 as eligibility for the premium tax credits is based on the income for the current year and not the previous year.

Quote:


§ 1.36B–2 Eligibility for premium tax credit.


(6) Special rule for taxpayers with
household income below 100 percent of
the Federal poverty line for the taxable
year. A taxpayer (other than a taxpayer
described in paragraph (b)(5) of this
section) whose household income for a
taxable year is less than 100 percent of
the Federal poverty line for the
taxpayer’s family size is treated as an
applicable taxpayer if—
(i) The taxpayer or a family member
enrolls in a qualified health plan
through an Exchange;
(ii) An Exchange estimates at the time
of enrollment that the taxpayer’s
household income will be between 100
and 400 percent of the Federal poverty
line for the taxable year;
(iii) Advance credit payments are
authorized and paid for one or more
months during the taxable year; and
(iv) The taxpayer would be an
applicable taxpayer if the taxpayer’s
household income for the taxable year
was between 100 and 400 percent of the
Federal poverty line for the taxpayer’s
family size.
(7) Computation of premium
assistance amounts for taxpayers with
household income below 100 percent of
the Federal poverty line. If a taxpayer is
treated as an applicable taxpayer under
paragraph (b)(5) or (b)(6) of this section,
the taxpayer’s actual household income
for the taxable year is used to compute
the premium assistance amounts under
§ 1.36B–3(d).

chai2
 
  1  
Reply Fri 14 Nov, 2014 09:41 pm
@curiousv,
curiousv wrote:

We have health coverage for my mother and our reported income to marketplace is 12k but what if it falls below 100% poverty line of $11490 (we are not sure yet as her income is not consistent) ..and if we file income tax return for less than 100% poverty line she will not be eligible for premium tax credits for year 2015 but what will happen to tax credits she already received for year 2014???? Will IRS ask her to pay it back to IRS?


It would also be a good idea to call and speak to someone at healthcare.gov.

In general I've found them to be helpful

This may not apply to your mothers situation, but I can compare it to what I am experiencing this year.

I initially gave healthcare.gov what I believed my income would be for 2014, when applying for a policy.

Subsequently, I decided not to work much this year, and only had some random income, and dividends. I'm married, but my spouse is on Medicare, so I got a policy just for myself. I made so little income this year non of his social security income will be taxable.

My taxable income as of the middle of October, and projected for the rest of the year, was not going to meet the 100% of the poverty line. I was alarmed to see that if taxable income dropped below that level, I'd be obligated to pay for the rest of the premium.

I solved the problem by figuring out how much I was going to be short, and I'm going to be able to earn a little more than the difference by doing things like walking neighbors and relatives dogs, running errands etc.

Otherwise, yes, I would owe the IRS the credit back. yikes, I feel your pain/shock.

Is there any way you can report a little extra income for your mother? It looks like she would only have to earn a few hundred dollars by the end of the year. Perhaps she could earn money from you for babysitting, housesitting, providing some sort of service for you or a friend? It's crazy, your income could literally drop $1 below the line and your screwed.

I take it your mother isn't medicare age.

If her income isn't up to a certain level, could she apply for medicaid (as opposed to medicare)?

I live in Texas and the rules are somewhat different here. I couldn't qualify in any event for medicaid because of assets.

I suggest you go to this website below and punch different figures in for different incomes for your state, and see what you come up with.

http://kff.org/interactive/subsidy-calculator/

chai2
 
  1  
Reply Fri 14 Nov, 2014 09:45 pm
@chai2,
Oh, btw, and I may not be correct about this, just what I remember reading.

If an overpayment is made, you would be able to get back as much as $600.00 for the year.

My premiums were about $150 a month, based on what I initially thought I'd earn. This was based on the bronze plan.
With earning just enough to be over the line, my premium would be, I hope you're sitting down 6 CENTS a month.

However, since I just learned all this, and wasn't paying attention, I've paid about $1800 for the year, and if it goes as expected, I'll only get back $600.

In case anyone is wondering, the reason I believe your premiums go sky high is you earn LESS than a certain amount, is that they figure you should have applied for medicaid, and if you don't qualify, you should be able to pay out of your assests.

So, your mom needs to make enough to get low premiums, and not fall below that line. Hopefully this will help your planning for next year.
0 Replies
 
chai2
 
  1  
Reply Fri 14 Nov, 2014 09:58 pm
Here's another good link from Kaiser....

http://kaiserhealthnews.org/news/interview-with-cathy-livingston-on-how-to-apply-for-tax-credit-subsidies-for-premiums/

I think it's been confusing this year because it's all new.

IMPORTANT: If you have a special circumstance, like your income suddenly decreases because you, let's say lose your job, or increases because you got a job, you need to call healthcare.gov to let them know of this change. They will refigure what your premium should be, and send that information to the health insurance company so they can adjust your premium.

In my case, I had to mail them check stubs, dividend statements to prove to them what my income was now going to be.
0 Replies
 
curiousv
 
  1  
Reply Sun 23 Nov, 2014 09:12 pm
@Peter Frouman,
So you are saying maxing repayment would be $600?
chai2
 
  1  
Reply Sun 23 Nov, 2014 10:15 pm
@curiousv,
You know, I'm not sure if it's $600, or your actual overpayment.

I'm planning on calling the IRS about this.

Maybe you should too. Customer service there has been helpful to me.
chai2
 
  2  
Reply Tue 25 Nov, 2014 11:12 am
@chai2,
Ah!

Just had an interesting conversation with customer service at the IRS.

Was lucky enough to get a CSR who really wanted to help. She didn't know the answer, but put me on hold and did some research. She said "I know this question will be coming up again, so I need to find out. So far people have been calling with the opposite question, because they'll have to pay"

While she couldn't say for sure if a person would get back All of the excess money that was paid in, it wouldn't be limit to just $600.00

The taxes that are being withheld through work, social security etc are not related to the insurance credit. Apples and oranges.

So for instance, in my case I had no work income tax taken out this year, but my husband had about $900 withheld from his Social Security (going to need to change that social security withholding). Since I estimate we will owe no tax this year, we will get back that $900, plus the excess of premiums paid. They are different line items on the 1040 form. The 1040 is going to look pretty different this year.
The worksheet for figuring the premium credit is Form 8962. I'm going to look that form up later.

Keep in mind from your original question, that your mother will have had to have made at least a certain amount.

Edit:

Here's a link to the 8962

http://www.irs.gov/pub/irs-pdf/f8962.pdf
0 Replies
 
 

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