So, as explained above, I was unemployed for the first half of 2024: my wife makes $50k/year and we had ACA coverage. For the 2 of us, the subsidy was roughly $1k/month.
I got a job mid-year and made enough that the IRS now says I owe the money I received in subsidy, even though I was unemployed at the time. Logically, this doesn't make a lot of sense: I wouldn't have asked for a subsidy had I not been unemployed, and once I was employed I was on my employer's insurance and dropped the ACA coverage.
Does the IRS calculate income eligibilty for Obamacare over a calendar year or is there an option to show zero income during the time we had our ACA coverage?
Had ACA coverage when jobless, got a job mid-year, now hit with $6k bill to cover subsidy
byu/RoyalRenn intax
Posted by RoyalRenn
7 Comments
You are required to keep track and inform marketplace when your income changes. The coverage is calculated based on yearly income.
The subsidy is based on your entire year mAGI, and it is quite possible that if your subsidy was based on low income for the first half of the year and then you made more during the second half that you would have to repay.
You more than likely have to pay back all the subsidies since you did the right thing and got a job.
It’s calendar year. If you are unemployed for the whole year and win the lottery in December you have to pay back all the advance premium tax credits with your annual tax return (assuming the prize is large enough, is income in that year, etc)
When you apply you are supposed to report all household income if married, not just yours. If something changes a few months later you are supposed to report the change immediately. Most people don’t understand that part.
The subsidy helped your cash flow at the time. Now you have the money to pay it back.
The zero income would have helped you or your children get on medicaid at the time if you were eligible in your state.
The way you can control your income would have been to put more into a 401k as that reduces your MAGI.