What is the “bottom Line” on the income number MAGI
that one should put down for Covered CA Income?

 

Modified Adjusted Gross Income  (MAGI) (2) … means adjusted gross income – Line 37* or 7 of the new 2018  1040   * Health Care.Gov  * 26 USC §62

Line 37 Prior to 2018 Adjusted Gross Income from your Tax Return Form # 1040

Line 37 Adjusted Gross Income

2018 1040 Form

2018 Schedule 1  Additional Income & Adjustments to Income

*increased by

(i) IRC §91[foreign income] Form 2555

(ii) Tax-exempt interest (Line 8b – 2a) [IRS Coursework] [Form 8815  Interest Income   Investing Answers.com     ]the taxpayer receives or accrues during the taxable year; and

(iii) some Social Security Benefits  (Line 20a & b – 5 a & b)   (UC Berkely One Page Summary)    CFR 1.36 B 1  * IRS Publication 974 George Town.edu

Official Publications on MAGI

It’s important to read the all material & links as one can’t rely on Covered CA to give you the correct answer.

UC Berkeley explains MAGI Modified Adjusted Gross Income – Click to enlarge and for a more clear picture

UC Berkeley explains MAGI Modified Adjusted Gross Income

MAGI Definition

IRS 1040 - MAGI  Line 7 or 37 (Instructions)  + Foreign Income Form 2555, Tax Exempt Interest Line 8b, Social Security Line 20

2018 Schedule 1  Additional Income & Adjustments to Income

Explanation of differences in new 2018 tax forms

IRS 1040

MAGI & Household Calculation - Western Poverty & Law Center
MAGI & Household Calculation – Western Poverty & Law Center

Tax Payer Family - Married Must File Jointly - children with part time jobs can file as long as they don't click box 6a
Tax Payer Family - Married Must File Jointly - Children Part Time Income - Line 6a?

Form 8962 Instructions
Form 8962 Instructions

Free Instant Quotes - Including Subsidy Calculation

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What counts as income?

Covered CA - Countable Sources of Income -
Getting to MAGI and Line 37 or 7 AGI

Covered CA - Countable Sources of Income

Video

Report Changes as they happen # 5152
Our webpage on reporting changes 

Report Changes as they happen

Changes should be reported within 30 days. Here's instructions.  If you've appointed us - instructions - as your broker, no extra charge, we can do it for you. 

Video Importance of Reporting Changes - Covered CA Video

IRS Video

Premium Tax Credit Flow Chart - Eligible?
Premium Tax Credit Flow Chart - Eligible?

Details…

Household income means Code of FEDERAL Regulations – IRS Income Taxes – 1.36B 1 – (e) …(1) … the sum of—

(i) A taxpayer’s modified adjusted gross income; (Line 37 NEW Line 7  1040)  plus 

(ii) The aggregate modified adjusted gross income of all other individuals who—

          (A) Are included in the taxpayer’s family under paragraph (d) [below] of this section; and

          (B) Are required to file a return of tax imposed by section 1 for the taxable year (determined without regard to the exception under section (1)(g)(7) to the requirement to file a return). [26 USC §6012  ♦ IRS tool to see if you must file a return  ♦  Medi-Cal Household Size Flow Chart ♦ Blog – Insure Me Kevin.com]

(f) Dependent has the same meaning as in section §152 *  IRS Interactive Assistant

(d) … A taxpayer’s family means the individuals for whom a taxpayer properly claims a deduction for a personal exemption under section 151 for the taxable year.

Family size [Medi-Cal Household Size Flow Chart ♦ Blog – Insure Me Kevin.com] means the number of individuals in the family. Family and family size may include individuals who are not subject to or are exempt from the penalty [mandate] under  §5000 A  (f)  (1) for failing to maintain minimum essential coverage.

 26 USC § 151 – Allowance of deductions for personal exemptions  pdf

(a) Allowance of deductions
In the case of an individual, the exemptions provided by this section shall be allowed as deductions in computing taxable income.

(b) Taxpayer and spouse
An exemption of the exemption amount for the taxpayer; and an additional exemption of the exemption amount for the spouse of the taxpayer if a joint return is not made by the taxpayer and his spouse, and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer.

To be more clear  —  (2) Married taxpayers must file joint return. A taxpayer who is married (within the meaning of section 7703) at the close of the taxable year is an applicable taxpayer only if the taxpayer and the taxpayer’s spouse file a joint return for the taxable year. GPO.Gov Final Regulations Page 11   *   Turbo Tax Calculator  *  Tax Policy Center…..  Joint or separate?  * Estranged Spouse?

(c) Additional exemption for dependents
An exemption of the exemption amount for each individual who is a dependent (as defined in section 152) of the taxpayer for the taxable year.

Premium Tax Credit Form 8962   &    Instructions

Get a Free No Obligation Calculation of your Tax Credit, Premiums and see the benefit brochures.

View other pages & resources in this section…

Getting MAGI Right – 23 page primer by GeorgeTown University on differences that apply to Medicaid (Medi-Cal) and CHIP  Children’s Health Insurance Program    Insure Kids now CA

Power Point presentation CMS Income Counting MAGI

Health Care.Gov – What income to count

InsureMeKevin.com analysis

See also this article on Kevin’s site

If you would like to talk to a professional tax adviser about this try Bruce Bialosky [email protected]  310.273.8250

Anchors

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25 comments on “MAGI – Modified Adjusted Gross Income – Line 37* Now 7

  1. I do not have a line 37 on my 1040 – however I do have a Schedule A (Agriculture business) amount on my line 8 that is subtracted from my line 7 (gross income) to get My line 10 taxable income – from which 12% is calculated and became the amount I paid in taxes.

    Do I use my taxable income for 2018?

  2. Hi,

    My mom has been told that she is no longer eligible for Medi-Cal because of her Alimony. She’s been on Medi-Cal for close to 3 years with this alimony and is just now being told that she doesn’t qualify.

    My mom is self employed and reported a loss of $6000 on her federal taxes as part of her schedule C. Her alimony is $20,0000 annually. Her AGI based on line 37 is around $14,000. She has been repeatedly told that her loss of $6000 and the fact that her AGI based on line 37 of her 1040 is under the income limit for Medi-Cal do not matter, and that her alimony is higher than the income limit and that is all that matters.

    Based on everything that I’ve found online, including what is on your website, it seems like she should be eligible for Medi-Cal. She has been told on the phone and in person at the Medi-Cal office that she is not eligible and will not have Medi-Cal as of the end of August.

    Is there any advice you can give us?

    Thank you!

    • Here’s our page on Alimony.

      Near as I can tell and I’m not allowed to give tax advice, if the divorce settlement was done before 12.31.2018, alimony counts as income.

      But you are right, Medi Cal is based on MAGI income as defined above. Line 37 – now 7 + …

      $14k qualifies one for Medi Cal see chart.

      Here’s our page on MAGI income qualification for Medi Cal.

      Here’s our contact page for Medi Cal Try emailing your question and my research to this address [email protected]

      B. Counting Income

      MAGI Medi-Cal and MCAP use largely the same MAGI methodology that is used by Covered California for counting income. Taxable income, Social Security benefits, tax-exempt interest and foreign earned income are all included.

      2. Income Threshold for Financial Assistance

      Most adults with household incomes up to 138% FPL in California are eligible for Medi-Cal (for children, the income standard is set at 266% FPL), and as described above, eligibility for Medi-Cal precludes eligibility for Covered California. In the vast majority of cases, an individual must have household income above 138% FPL to qualify for premium tax credits – and most children must be in families with incomes above 266% FPL in order to obtain premium tax credits. Western Poverty Law *

      What is your Mother’s expected income for 2019? 2020? When income gets too high, then you can get subsidized coverage with Covered CA. Get quotes here. No charge to have us as your broker.

      the IRS does often rely on what is known as the “3-of-5 test.” This means that a successful small business should typically earn a profit three of every five years. If you have attempted to turn your hobby into a profitable business for seven years with no success, it may become difficult to claim profit as your true motivation. biz fluent.com

      Our webpage on hobby or business

  3. We are having technical difficulties with replies being indented.

    Here’s the question, I’m answering:

    Anonymous Asks:

    I called Covered CA and told them my income was the following:

    To date Jan thru Feb 25, 2018 for Bxx Hxxx I have received 4 paychecks. YTD gross for them is $3838.00.

    Txxx On Rxxx less than $500.00 this year.

    Just started with CxxC on Feb 26, 2018 and so far received a check for approximately $274.02 from them.

    My premium just took a drastic jump, Why?

    *************************************************************
    Our Reply

    First of all, while Covered CA did add all the entry pages for ones income and deductions, IMHO (In my Humble Opinion) it’s best to just figure out what you are going to have as MAGI income at the end of the year on your tax return. It’s basically line 37. Scroll to the top of this page for more detail.

    If you are going to fill out the entire form, then again IMHO it’s best to log into your Covered CA account and complete the form yourself. Here’s our webpage on how to update, change your income.

    I do not recommend just calling and having someone else enter information for you. This is also why, we prefer that you email us rather than call. This is how someone whose income went from $15/hour to $15.20/hour gets hit with $40k in income, when it should be closer to $25k, being as she’s a teacher and doesn’t work summers.

    Here’s our free quote engine to figure your subsidy based on the income you project for the current year. The PAST is not relevant, unless your projected income is in question and Covered CA wants some kind of proof.

    Excerpt of Covered CA Income Entry Page

  4. i am head of household (IRS and CA FTB – CA Taxes) for my daughter and grandson who are both adults and grandaughter who is 2 yo.

    The three live full time with me, they have no income, and are all on medi-cal (no special circumstances).

    my AGI in 2016 will be approximately $78,000.

    can i claim them as dependents for tax purposes and still keep them on medi-cal?

  5. I am in the process of applying, [for Covered CA] I do long form taxes, [1040] can I deduct car registrations, home property taxes, amortization from rental and expenses on rental to lower my income.

    • MAGI income is defined at the top of this page. MAGI is line 37 of your 1040 plus foreign income, tax exempt interest and some Social Security benefits. For details of what goes on line 17 Rental Income, please see our rental income page. We are happy to be your agent for Covered CA and there is no additional charge. Click here for instructions to appoint us if you already have an account with them.

    • Know how adjusted gross income affects taxes
      • A taxpayer’s AGI and tax rate are important factors in figuring their taxes. AGI is their income from all sources minus any adjustments or deductions to their income.

      Generally, the higher the AGI, the higher their tax rate, and the more tax they pay.
      • Tax planning can include making changes during the year that can lower a taxpayer’s AGI. The taxpayer could:
      o Contribute to a Health Savings Account
      o Claim educator expenses if they’re a qualifying educator
      o Pay student loan interest

      A full list is on Schedule 1 of Form 1040.https://www.irs.gov/pub/irs-pdf/f1040s1.pdf

      Save for retirement
      • Retirement savings can also lower AGI. https://www.irs.gov/retirement-plans
      o Contributing money to a retirement plan at work like a 401(k) plan can reduce a taxpayer’s AGI.
      o Investing in a traditional IRA plan is another way to save for retirement and lower AGI.
      o Self-employed SEP, SIMPLE, and qualified plans are also retirement options that can lower AGI.

  6. Hi,

    I have a couple of questions for you:

    I am currently receiving Medi-Cal and have had an increase in wages which has brought me to $16,938 in annual income. I desperately want to be enrolled in the Kaiser silver 94 HMO benefits through covered California.

    Will the increase in wages be considered a qualifying event?

    If I were to have you assist me would that remove the DHCS caseworker from determining approval or speed up the process?

    Thank you

  7. I am moving and am using special enrollment to change my healthcare coverage. According to the rules, if I apply before the 15th of a month, coverage begins on the 1st of the following month. If I apply after the 15th, then coverage begins on the 1st of the second month after I apply. Thus coverage can start up to a maximum of 45 days or so after I apply.

    In applying, I was declared as “conditionally eligible” due to them requiring that I “verify income” by 90 days after my application date.

    My question is:

    Will I be uninsured for the period after my coverage is suppose to start up until the day the approve my attempt to verify income? This could be a 45 day period in which I need medical care. Or will I be covered for those 45 days and if they reject my verification of income – then will they drop me from my new plan?

    Thanks for all the help on your website!

  8. If a person owns property and is on Covered California will all the medical expenses have to be payed paid back after the death of the person on Covered California?

  9. Hi Steve,

    I’m enrolled in anthem blue cross viA California Covered Care.

    I get letters that contradict each other routinely. One letter says I’m covered , the other says I’m not.
    I’ve spent hours on phone with California covered care with people who have questionable English literacy.

    I need a professional to deal with California Covered as they are too disorganized for a non insurance specialist to deal with all their idiosyncratic behavior.

    Can you help me ?

    Thanks,

    Martin

    • Yes, we would be glad to help you. Two things that you need to do to transfer your case to us.

      1. Change your Covered CA agent delegation to use. Here are the instructions. If you have trouble, just send us your user name and password and we can do it.

      2. Email us for the Blue Cross Change of Broker Form Blue Cross though has tricky rules and if you are a “house account” they might not pay us.

      Once we have access to your Covered CA account, we can view all the letters they send you. If Blue Cross won’t recognize us as your agent, then:

      3. Get an ONLINE Member Account and give us the user name and password for that.

      Then we should be fully able to help you. If you were to get additional coverage, like Life Insurance, Long Term Care or Disability that would be a way to compensate us for our time, if you are a “House Account” or you had coverage with Blue Cross prior to 1.2014.

      Steve

  10. I am currently receiving Medi-Cal due to low income (my MAGI is less than 138% FPL).

    On my 65th birthday, I will get to keep Medi-Cal just by being 65 years old, even if my MAGI is greater than 138% FPL. Is this assumption correct ?

    Regards,
    Tom N

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