Should IRA distributions be included as income for Obamacare tax credit calculation?

Forum|Forum|6 years ago
June 1, 2019
2 replies
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United Healthcare informed me IRA distributions would not be included in the income calculation for Premium Tax Credit. If IRA distributions are not included I would qualify for a Premium Tax Credit.

TurboTax Deluxe Windows

Best answer by WillK

Under Obama Care the income calculation for Premium Tax credit includes the following:

Earned Income
Wages, salaries, tips
Self-employment, business and farm income after deduction of business expenses (including depreciation and capital losses)
Unearned Income
Interest (taxable and non taxable)
Social Security (SSA) income
Dividends
Taxable state income tax refunds and credits
Portion of scholarships, awards or fellowship grants used for living expenses
Alimony received
Capital/other gains
IRA distributions (taxable amount only)
Pensions and annuities
Rental real estate income and royalties
Unemployment Compensation
Other income if taxable (such as prizes, jury duty pay not given to employer, etc.)

If your IRA distributions are non-taxable then they would not count towards the income.

WillKAnswer

Employee

Under Obama Care the income calculation for Premium Tax credit includes the following:

Earned Income
Wages, salaries, tips
Self-employment, business and farm income after deduction of business expenses (including depreciation and capital losses)
Unearned Income
Interest (taxable and non taxable)
Social Security (SSA) income
Dividends
Taxable state income tax refunds and credits
Portion of scholarships, awards or fellowship grants used for living expenses
Alimony received
Capital/other gains
IRA distributions (taxable amount only)
Pensions and annuities
Rental real estate income and royalties
Unemployment Compensation
Other income if taxable (such as prizes, jury duty pay not given to employer, etc.)

If your IRA distributions are non-taxable then they would not count towards the income.

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newt45

Is this correct for 2024 taxes as well?

Why does Turbo Tax desktop put 1099-R non-taxable rollovers under Pensions and Annuities? They should be under IRA distributions and then would be show as Non-Taxable.

mglauner

All 1099-R's are reported in the same section. A Code G in Box 7 indicates a non-taxable rollover, so pay close attention to any follow-up questions after entering a 1099-R.

The distribution amounts shows on Form 1040, Line 5a, and any taxable portion shows on Line 5b.

Here's more detailed info on Form 1099-R.

@newt45

Hal_Al

Employee

Yes, the taxable portion of IRA Distributions count as income for the preimium credit.

"For purposes of the premium tax credit, your household income is your modified adjusted gross income plus that of every other member of your family (see question 6) who is required to file a federal income tax return. Modified adjusted gross income is the adjusted gross income on your federal income tax return plus any excluded foreign income, nontaxable Social Security benefits (including tier 1 railroad retirement benefits), and tax-exempt interest received or accrued during the taxable year. It does not include Supplemental Security Income (SSI)." Reference: https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit