Going Over Estimated MAGI for ACA and Underpayment Penalty

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dcop
Posts: 110
Joined: Fri Sep 08, 2017 6:06 pm

Going Over Estimated MAGI for ACA and Underpayment Penalty

Post by dcop » Tue May 14, 2019 1:24 pm

Example: I project my MAGI at an amount that gives me $300 a month in subsidies for my ACA premium. Then at the end of the year my MAGI was higher and wiped out the subsidy causing me to be short $3600 in my premiums for the year. (This is only an example not a real scenario for me at this time).

Will the short fall be applicable to an underpayment penalty?

fabdog
Posts: 485
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Location: Williamsburg VA

Re: Going Over Estimated MAGI for ACA and Underpayment Penalty

Post by fabdog » Tue May 14, 2019 1:33 pm

since it will add to your amount owed in taxes, it will be part of determining whether you have an underpayment penalty

Whether you actually have a penalty will be determined by your overall liability vs what you had with held and paid in estimates.

If you had at least 100% of this years liability withheld (110% if AGI over $150K) then you won't have a penalty

Mike

Topic Author
dcop
Posts: 110
Joined: Fri Sep 08, 2017 6:06 pm

Re: Going Over Estimated MAGI for ACA and Underpayment Penalty

Post by dcop » Tue May 14, 2019 1:40 pm

fabdog wrote:
Tue May 14, 2019 1:33 pm
since it will add to your amount owed in taxes, it will be part of determining whether you have an underpayment penalty

Whether you actually have a penalty will be determined by your overall liability vs what you had with held and paid in estimates.

If you had at least 100% of this years liability withheld (110% if AGI over $150K) then you won't have a penalty

Mike
Thanks Mike. I thought it was 90% of liability and then I heard something they lowered it to 85% for 2019. Even tho this really doesn't pertain to my ACA question I'm just curious.

boomer_techie
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Re: Going Over Estimated MAGI for ACA and Underpayment Penalty

Post by boomer_techie » Tue May 14, 2019 7:37 pm

dcop wrote:
Tue May 14, 2019 1:40 pm
Thanks Mike. I thought it was 90% of liability and then I heard something they lowered it to 85% for 2019.
It is 90% of the tax due on the return you are filing, or 100%/110% of the return you filed the previous tax year.

(It seems that Mike has already switched to thinking about the taxes due April 2020, i.e. the plan right now for the rest of 2019 is to prepay 100%/110% of what was owed on the tax return that was due last month.)

hayhayday
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Joined: Tue Jan 15, 2019 12:42 pm

Re: Going Over Estimated MAGI for ACA and Underpayment Penalty

Post by hayhayday » Wed May 15, 2019 1:29 pm

Unless you go over 400% FPL the repayment is capped so may not be much of an of an issue if you are below that .

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