If one has a tax loss and shows a negative number for line 37 MAGI income on their 1040
can they get subsidies in Covered CA,
What if they have income from a job, rentals, business or other?
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 Tools.com
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
Insure Me Kevin.com where guy had to pay back subsidies as Covered CA didn’t add that back in for line 37 MAGI.
Insure Me Kevin.com inflating income to avoid Medi-Cal
Fudging the income? Fraud & False Statements
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.
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.