Click here to JUMP to our main article 

IRS - Your Federal Income Tax - Publication # 17  

What counts as Income?

Gains & Losses

Adjustments to Income?


How to figure your tax?

Free Instant Quotes - Including Subsidy Calculation

Free Instant Quotes - Including Subsidy Calculation

Same Price as Covered CA or Direct with Insurance Company!

Set up time for phone, Skype or face to face meeting


Guaranteed Issue - No Pre X Clause

Detailed Video Instructions on using our Quote Engine


Rando's - Double Check Everything
Rando's - Double Check Everything

Publication 536 Net Operating Losses NOL  

NOL Steps
How To Figure an NOL
Worksheet 1. Figuring Your NOL 
When To Use an NOL
Exception to the No Carryback Rule 
Waiving the Carryback Period 
How To Carry an NOL Back or Forward 
How To Claim an NOL Deduction
Deducting a Carryback
Deducting a Carryforward
Change in Marital Status
Change in Filing Status
How To Figure an NOL Carryover
NOL Carryover From 2018 to 2019
Worksheet Instructions 
Excess Business Loss 

What if I show a negative AGI Line 37 – 7 or MAGI Income.
Can I get subsidies?
Buy a regular Plan?

What if I have income from a job, rentals, business or other?

First, let’s look at the definition of MAGI income on that webpage or the definition in Publication # 974

Modified AGI.  MAGI For purposes of the PTC, modified AGI is the AGI on your tax return (line 37 of 1040) plus certain income that is not subject to tax (foreign earned income, tax-exempt interest, and the portion of social security benefits that is not taxable)
Second –  To be an applicable taxpayer, you must meet all of the following requirements.
a. For 2015, your household income is at least 100% but no more than 400% of the Federal poverty line for your family size (see Line 4 in the Form 8962 instructions) – Publication 974 page 4 – However, if Covered CA (Market Place) estimated your income qualifies and actually gave you a subsidy APTC then you can take the credit.  Draft 2015 Publication # 8962 Page 7
However, IMHO check with competent tax and legal counsel, with a tax loss and it lowers line 37 and you don’t have the add ins for MAGI income, you can’t get subsidies.

A tax loss occurs when total expenses are greater than total revenues under the tax reporting rules of the applicable government jurisdiction. A tax loss reduces an entity’s tax liability only in proportion to its tax bracket.

Businesses and individuals will frequently reduce their reportable revenues or increase their reportable expenses for tax purposes in order to reduce their tax payments. Thus, an entity may report a tax loss at the same time that it reports a profit under generally accepted accounting principles or international financial reporting standards. Accounting

Be careful of taking advise over the phone, even if it’s Covered CA, Rando’s on the internet or even our prestigious website.  That’s why we endovor to link to an authoritative source for everything we say.  Here’s where someone got a $13k tax bill as Covered CA didn’t tell him he had to add his Social Security back in to get MAGI Income.


The best way to see what plans you qualify for is to use our no obligation instant quote engine.

You might also look at the income chart.   If your family income MAGI Modified Adjusted Gross Income, Line 37 + Social Security, Foreign Income, Exempt Interest is below 138% of Federal Poverty Level you qualify for Medi-Cal  – Medicaid and would not get Covered CA subsidies.

We do not get paid to help you with Medi-Cal nor any real support from Medi-Cal in training or anything.  Our Medi-Cal website is Pro Bono.   If you have questions on Medi-Cal, please look through that  site.  We’ve linked to whatever authoritative information we can find.  If you have questions on Medi-Cal, please ask  at the bottom of the page that is most appropriate.  You don’t have to leave your name.   We are not here to sell you on the benefits – coverage of Medi-Cal.  We don’t get paid for it.  Here is our FAQ page on Medi-Cal.

If you qualify for Medi-Cal, no one can force you to use it.  You can still buy a regular policy from any Insurance Company.  You just won’t get subsidies.


Loss of  Minimum Essential Coverage as a Qualifying Event

Get quotes here for CA,  Nationwide to show premiums, benefits and potential subsidy – tax credits.

Resources, Links and Related Pages in Tax Credits » FAQ’s  Section


Our page on the  Premium Tax Credit IRS #8962 & Instructions


View our page on how the APTC Advance Premium Tax Credit is Calculated CFR §1.36 B – 3 Federal  Regulations



MAGI means different things in different Government Codes

Net Operating Losses (NOL’s) Publication # 536

If the tax loss is from your business, at least your premiums are a deduction, §106.  Self Employed take the deduction on line 29 of the 1040.

Insure Me where guy had to pay back subsidies as Covered CA didn’t add that back in for line 37 MAGI.

Insure Me inflating income to avoid Medi-Cal

Fudging the income?   Fraud & False Statements

Misstatements on Application

Do you have to pay back the APTC or take it as income?




This is one of those unintended consequences of the PPACA.  The law says APTCs are obtainable by persons with MAGI of 100%-400% FPL.  This is a unique situation and I don’t believe Congress expected this as the norm.  But the law is the law, and the IRS will either allow or disallow the APTCs.

Personally, I think the IRS will allow the APTCs since this person is obviously a “taxpayer” not a welfare recipient.  Otherwise, it would make a great case in Tax Court.

MAX  max herr insurance

Steve:  How many will even get the chance?   Has Covered CA been overlooking it?  Even when a qualifying MAGI is put in, but line 37 is negative?  

Like this reply from Covered CA — Response By Email (R) (02/10/2016 12:22 PM) 

Good day Steve Shorr,   Once you update their income, and it’s reflecting the negative income then they will be up for review.  Please let me know if you need further assistance.  

Does Covered CA actually review the Tax Return?  I did mention wrong information and Covered CA agreed about it not being worth the legal ramification.  Fudging the income?   Fraud & False Statements

I think this probably affects a significant number of taxpayers nationwide, and is “ripe” for adjudication in the federal Tax Court in order to have a definitive ruling.  Theoretically, MAGI Medi-Cal eligibility is a month-to-month test, not really an annual test.

Unfortunately, I don’t know any tax attorneys, but if your client is willing to take his case to Tax Court, I can probably get a referral or two from some of the insurance attorneys I have worked with.





7 comments on “Tax Loss – Negative MAGI Income – Medi Cal? Subsidies?

  1. I have a wife and 13 year old daughter. Our household income is under $40,000.00 BUT, thanks to a hefty loss carryforward, my MAGI is -$150,000.00.

    Is there any way to get covered California, at least for my wife and daughter (I have Medicare)?

      • 1 This year I am earning $20,000.00. I have Medicare Advantage. My wife and daughter currently have Medi-Cal.

        2 I’ve just started receiving Social Security which will be $22,000.00 next year. If I continue earning $20,000.00 from working, our total income of $42,000.00 will knock my wife out of Medi-Cal, at least as I understand it.

        3 My daughter, however, can continue with her Medi-Cal.

        4 This is why I’m looking at insurance for my wife and not necessarily for my daughter.

        5 If we have to pay $12,000 to $15,000 for health insurance, maybe I should stop working and leave my wife (and daughter) on Medi-Cal.

        • 2 Here’s the income chart for Covered CA While $42k would put you in Silver 73, the chart goes by MAGI Modified Adjusted Gross income that is Line 37 Adjusted Gross Income of your tax return, plus Social Security (It might not count in full), Foreign Income and Exempt Interest.

          Your tax loss would show on line 13 or 14, right? Thus as a negative number it would make your $42k below zero, right? Thus, since your income is below $34k for a family of four, that would put you in Medi-Cal and not subsidies.

          I’m not a CPA or tax attorney. Please review the Government Documents cited, this website and our Medi-Cal website, Western Poverty Law and go over them with appropriate counsel.

          4. If you put your mouse over the premium on my quote engine, it will show the premiums for each person.

          5. There are some who say that Obamacare will die on it’s own. The Middle Class can barely afford their own premiums, let alone the subsidies and Medi-Cal.

            • Letters from Covered California / MediCal said that with our household sized our household earnings could be up $2,2014.08 per month for my wife to stay on Medi-Cal and $4,527.00 for my daughter to stay on Medi-Cal.

              The renewal forms ask about our monthly earnings (wages) and income (I assume this includes Social Security) and nowhere mentions MAGI so it’s quite a surprise to me to find that our qualification is MAGI-based.

              I need to thank you for letting me know this.

Leave a Reply

Your email address will not be published. logo