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Covered California Q&A

Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.

What Counts, Income Last Year or This year?

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Question: If someone sold a income property net $100,000 in 2012 to make ends meet which is the retirement monies. Would they be able to get help if normal income is $25,000 per year and single?

Answer: What counts is your current income. If it is significantly different from last year that will be taken into account in the enrollment process. While, last year’s AGI is an important reference point, it’s you current income or your estimate of your income for the current that counts.


Does Property tax on my residence counts as an expense for Obamacare calculation?

“What counts is your current income”

This only tells a small part of the story. The tax-credit subsidy is based on “prospective” income — that is, an estimate of your 2014 income. Based on what? Your 2012 tax return — the only concrete piece of tax information in 2013 available before December 31, 2013.

The problem is, a person applying for a subsidy must estimate his/her income for 2014. You should use 2013 income as a guide, but understand that payraises, overtime, change of occupation with a pay increase, or loss of deductions which raise one’s Adjusted Gross Income (AGI) will alter the outcome when tax returns for 2014 are prepared in 2015.

The result could be an unexpected TAX LIABILITY — the refund a person was expecting to receive could be wiped out in whole or in part by having to repay a portion (possibly all?) of the tax subsidy received in 2014. Not a pleasant surprise.

For more on this subject, read this article (c) 2013 Associated Press: http://www.lifehealthpro.com/2013/04/02/ppaca-health-subsidy-could-trigger-surprise-tax-bi

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