ACA problems already

[Terry D EA]

I think Jack is right on this. No filing requirement then not included in income for purposes of the ACA

[jklcpa]

So that we are all totally clear and for this topic to not mislead anyone since the second paragraph of SaraEA's original post that started this topic did not specify whether she was referring to the calculation of the SRP or the PTC, the code does have a variety of ways for calculating MAGI depending on the particular area we are working with.

 

Jack challenged me to provide definition of MAGI for the Shared Responsibility Payment (SRP), and I did that by providing sec 5000A, because that is the section of the code for the SRP.

 

In dealing with the Premium Tax Credit (PTC), IRC 36B covers that and has a definition of MAGI found in §36B(d)(2)(B ).  Still, in general and for purposes of the PTC, if the dependent is not required to file a return then that dependent's MAGI is not included for the the purpose of the PTC either.   HOWEVER...

 

HOWEVER,  because there's always a "but" right(?), ...   if parent(s) elect to include a dependent's income via form 8814, then that dependent's T/E interest and non-taxable social security would need to be included to properly calculate the PTC. 

 

8962 instructions in the section "Who Can Take the Premium Tax Credit" under Modified AGI:

Taxpayer’s tax return including income of a dependent child.

A taxpayer who includes the gross income of a dependent child on the taxpayer’s tax return must include in modified AGI the child’s tax-exempt interest and the portion of social security benefits that is not taxable

 

And there's this little blip beneath worksheet 1-1 for use in calculating taxpayer MAGI of those instructions:

 

If you are filing Form 8814 and the amount on Form 8814, line 4, is more than $1,000,you must also include on line 1 of this worksheet the tax-exempt interest from Form8814, line 1b; the lesser of Form 8814, line 4 or line 5; and any nontaxable social security benefits of your child.

 

 

Just to muddy clarify things a bit. 

 

Here's a link to 36B for anyone that needs to read that definition:  http://www.law.cornell.edu/uscode/text/26/36B

Edited January 18, 2015 by jklcpa
formatting & added link