8962

Technical topics regarding tax preparation.
#1
zl28  
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Have a client where both husband and wife are self-employed and make modest income -
around 75k.

After deductions, their taxable income is only 30k.

They are on Obamacare.

I am trying to get the client to sell crypto-currency where there are long term capital gains of 45k.

The long term cap gains will be tax -free if they do this bc only in the 12% tax bracket.

Question: how come when i had 45k in cap gains i don't see a tax on form 8962;
they are getting a sizable advance premium tax credit.
 

#2
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What year? There was no 8962 for 2020.
 

#3
zl28  
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correct...but i did the projection on 2021 software that i've received so far and i'm not seeing and 8962 there either.

Can you comment if the 8962 waiving was only for 2020.

Perhaps my software isn't ready for 8962 computations for 2021 yet.

ty!
 

#4
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Waived only 2020. I tried $75K case with excess APTC and 2021 Proseries nothing but 2021 Drake did fill out the 8962 with the repayment amount and put on 1040 & Schedule 2. So too early for your tax sw.
 

#5
EZTAX  
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For 2021 and 2022 there is a new subsidy chart - 400% of poverty is no longer a cliff. I think it is 8.5% of MAGI but have not looked into it yet.
 

#6
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EZTax is correct.

So in this scenario, with taxable income (not including capital gains) at $30k, I'm guessing that MAGI not including capital gains is $55k, and MAGI with capital gains is $100k.

So the cost of health insurance after the subsidy is 8.5% of MAGI, or $8,500 in this case. Assuming they signed up for the SCLSP.

So you can take a look at the gross premiums, compare it to SCLSP, and subtract the APTC, and then compare it to the $8,500 to see how much APTC they'll have to pay back. (Or whatever, use the process that's on Form 8962, I'm not describing it correctly in detail here.)

But remember that they'll get to claim the APTC repayment as an SEHI deduction, which will help with that MAGI calculation.
 

#7
zl28  
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good points - thank you - easier when the software is working :)
 

#8
MilesR  
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Another note: in 2020 no one had to pay back health ins subsidies. In 2021 if the taxpayer received any unemployment during the year their income above the lowest % of the poverty line allowed (138%?) is ignored for calculating the allowed credit. Aka they get the maximum subsidy regardless of how high their income is. No repayment.
 


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