Scenario: Family of 5, self-employed, income $110k based on prior year in which they had a $10k write-off for health insurance (i.e. $120k income, less $10k deduction = $110k).
For 2015, they get a $6k/year subsidy based on $110k reported income, thereby increasing their income to $116k (since they can only write off $4k instead of $10k). With income of $116k they are ineligible for subsidy. If they pay back subsidy, they can now take the full $10k deduction since they would have paid the entire premium, which puts them back under the limit and should re-instate the subsidy. How's this work?
I asked a couple CPA clients and none of them had any idea. Anyone tried to figure this on tax software yet? Maybe I should ask H&R Block on January 8th
For 2015, they get a $6k/year subsidy based on $110k reported income, thereby increasing their income to $116k (since they can only write off $4k instead of $10k). With income of $116k they are ineligible for subsidy. If they pay back subsidy, they can now take the full $10k deduction since they would have paid the entire premium, which puts them back under the limit and should re-instate the subsidy. How's this work?
I asked a couple CPA clients and none of them had any idea. Anyone tried to figure this on tax software yet? Maybe I should ask H&R Block on January 8th