Scenarios for October

[HealthGuy]

Yagent...great point...maybe there will be a very large market we sell limited medical to who fear the clawback and simply pay the damn penalty. this i think is gonna be a huge market ! Who wants sebellius breathin down your neck for a subsidy payback anyway ! Many people WILL go without and buy the mini med products many ARE already !

 

[timsip]

Also, it's fraud to knowingly misstate income to the IRS.

I am not set up as an LLC or S Corp, so I don't know where company profits fall at the end of the year on paper. I don't see how it is fraud if my company pays me $25,000 per year and when I file my individual taxes, my W-2 supports it. Like I said, I don't know how the business income for an S Corp gets declared whether it is claimed by the business or the business owner. I know as a sole proprietor, it would not work, but when my income is separate from the business on a W-4, I didn't know if it was different.

 

[Ann H]

I am not set up as an LLC or S Corp, so I don't know where company profits fall at the end of the year on paper. I don't see how it is fraud if my company pays me $25,000 per year and when I file my individual taxes, my W-2 supports it. Like I said, I don't know how the business income for an S Corp gets declared whether it is claimed by the business or the business owner. I know as a sole proprietor, it would not work, but when my income is separate from the business on a W-4, I didn't know if it was different.

The net income for an LLC and S-Corp flows through to the Individual Federal Form 1040, just like it does for a Sole Proprietorship. For a C-Corp, there is a possibility they could lower the owners AGI by holding income at the corporate level as undistributed profits, but that may be silly when you figure in the corporate tax rate as well as the inevitability of those funds flowing to the person's 1040 tax return sooner or later anyway. However, I am sure there are some short-term situations where a business owner and their CPA or Tax Advisor will consider this strategy to be the best for the time being.

 

[timsip]

The net income for an LLC and S-Corp flows through to the Individual Federal Form 1040, just like it does for a Sole Proprietorship. For a C-Corp, there is a possibility they could lower the owners AGI by holding income at the corporate level as undistributed profits, but that may be silly when you figure in the corporate tax rate as well as the inevitability of those funds flowing to the person's 1040 tax return sooner or later anyway. However, I am sure there are some short-term situations where a business owner and their CPA or Tax Advisor will consider this strategy to be the best for the time being.

Finding a good CPA that can wiggle through the loopholes and various laws that can find a way for this to happen could create enough business to retire a guy....or not.

 

[timsip]

A couple own their home, cars paid off, no debt. They decide to retire early at 59 1/2 and draw from their retirement plans. Can they elect to draw only a minimal amount to keep their income at 200% FPL until they reach 65?

 

[Ann H]

Yes. But MAGI is made of all types of income, including taxable investment income, and certain other investments that are normally not taxable like bonds & foreign investments. The tax-deferred nature of a retirement plan may be to their benefit in this case, particularly if that is the lions-share of their portfolio. If all of these funds will keep their MAGI under 250% of FPL, then they may qualify for BOTH premium subsidies and cost-sharing subsidies.