Poverty level

[JenMO]

When figuring poverty level, what amount is used? the magi or magi after the threshold? $20300 (threshold) in the case of my clients - MFJ

[mastertaxguy]

US Poverty Income Levels

1. "There is no simple answer to these questions. When determining program eligibility, some agencies compare before-tax income to the poverty guidelines, while other agencies compare after-tax income. Likewise, eligibility can be dependent on gross income, net income, or some other measure of income. Federal, state, and local program offices that use the poverty guidelines for eligibility purposes may define income in different ways. To find out the specific definition of income (before-tax, after-tax, etc.) used by a particular program or activity, one must consult the office or organization that administers that program"
2. MAGI is used to compute "eligibility" for shared responsibility payments (ACA penalties).
3. In my state, poverty levels are determined by adding up all income, taxable and non taxable, in the person's household.

[JenMO]

I WAS FIGURING FOR T HE ACA PENALTY. 138% POVERTY LEVEL FOR 3 IS $27310. I WAS TAKING MAGI 46,000 (NO ACA POVERTY EXEMPTION) BUT WHEN SUBTRACT THE THRESHOLD mfj 20300 = $25700 = POVERTY LEVEL - EXEMPTION. NOT SURE IF THATS HOW IT WORKS. I DON'T THINK SO, BUT BEEN WRONG BEFORE

[mastertaxguy]

poverty level VS. PENALTY COMPUTATION

1. I believe the calculation you describe is for computing the shared responsibility payment.
2. The amount after subtracting the filing income threshold for the taxpayer is NOT the amount used to determine if the TP's are withing federal poverty level amounts.
3. See P. 3-15 of the TTB Health Care Reform book for a more detailed explanation of this aspect.
4. Poverty level is based on the person's income. Period. It includes, as noted, otherwise 'tax free' income. It is not based on how much the person as a taxpayer earned/received over their filing threshold amounts.