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I don't think I posed this title correctly, but here's the situation:
Suppose...I am paying the full amount on my health insurance with the ACA because I "believed" I would have income over the threshold and therefore do not get a subsidy. It is costing me as an individual $700 a month. I think my income will not reach the amount I have to stay under (I believe it was $60,000 or so for a couple, not exactly sure and that doesn't matter for this question)
Can I go back and amend it somehow and get the refund? If not, then what happens if I do the opposite next year? Take the subsidy because I believe my income will be lower than the threshold and it ends up being more? Where do I declare this? Who do I contact?
In other words, I want to know what does a person do when they don't know what their income will be. We are independent contractors
AND, VERY IMPORTANT...the employer puts ALL money due as income. There's a form for income taxes to separate the true earnings from, let's say, hotel expenses, car expenses, that is really not income but the employer lumps it all in as income. How then do I let the govt know that this wasn't income if I want to get the subsidy but our W4 states otherwise. Send in our tax papers?
Can I go back and amend it somehow and get the refund?
In other words, I want to know what does a person do when they don't know what their income will be.
You apply for the tax credit/subsidy when you file your 1040 for the year. It will either be applied to income tax due or refunded to you via check.
Quote:
Originally Posted by saralvr
We are independent contractors
AND, VERY IMPORTANT...the employer puts ALL money due as income. There's a form for income taxes to separate the true earnings from, let's say, hotel expenses, car expenses, that is really not income but the employer lumps it all in as income. How then do I let the govt know that this wasn't income if I want to get the subsidy but our W4 states otherwise. Send in our tax papers?
Yes - you apply for the subsidy on your 1040 when you file it, not on the basis of the W-x. Further, it isn't a W-4, W-4 is used for declaring exemptions - and, as an IC, you should NOT be paid on W-2 (salary), either. Chances are your income is being reported to the IRS (and you) on a 1099.
As an independent contractor you should be filing a Schedule C with your 1040. You list on the Schedule C gross income (from the 1099), from which you deduct various expenses.
The 1040 AGI (Modified) on your tax return is the number on which the ACA bases your subsidy.
It's all about your tax return. That's how the government knows and that's how you get a subsidy at the end of the year - in the form of a tax credit/refund.
Last edited by Ariadne22; 08-29-2015 at 03:02 PM..
Are you paying for the hotels out of your pocket and then getting reimbursed? If so, the employer can't really count that as income. If they are, then you can take the deduction as a self-employed person for business expenses, etc.
At the end of the year, there will be a form on your taxes that will calculate the under/overpayment.
Thank you both. My husband does pay for the hotels, cabs, etc out of his own pocket and yes, the employer does put it down as income. Our accountant then fills out the necessary form(s) to take it off as it isn't income.
I really appreciate your answering this question. It makes total sense. Again, thank you.
I get my coverage through the Federal Exchange because SC decided not to build one (they couldn't have pulled it off in time). So, last year I applied for coverage from 1/1 to 12/31 of this year. I was asked to provide the expected earnings of each member of our household. By doing so, the system calculated the subsidy I would receive so I could apply it to my monthly premium and keep my premium low through the year.
When my husband died last month our income was reduced greatly. I had to go back into the exchange and revise my application for 2015 to show the expected loss in income. Beginning November 1st, I can change my plan based on the new increased subsidy I'll receive because of the loss in income I experienced. I'll go from a $5,000 deductible plan to a plan with a deductible less than $500 with that increased subsidy. I don't have $500 let alone $5,000 and figure its far easier to request benevolence in the amount of $500 than $5,000.
Never "believe" something until you know all the facts!
You have 60 days after the life event to report the change but for premium credits, you can just report that on your taxes at the end of the year. Most people wouldn't want to do that because they would be paying significantly more during the year though and if you would qualify for out of pocket cost subsidies, you would want to report that change ASAP.
As a contractor you can already deduct your health insurance costs on the 1040 Form. You can't deduct your costs AND get a tax credit at the same time.
Check with your accountant whether it is worth readjusting the subsidy or just write off the higher premium.
As a contractor you can already deduct your health insurance costs on the 1040 Form. You can't deduct your costs AND get a tax credit at the same time.
Check with your accountant whether it is worth readjusting the subsidy or just write off the higher premium.
Thank you, I will check with him at the end of the year when I know how much we earned. Makes sense!
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