Federal Unemployment caused marketplace repayment

[MAJ]

Clients who utilized the Marketplace for health insurance in 2020 are in for a rude awakening this year as is one of my clients (so far).
Her salary had been reduced due to COVID-19. She was already in the marketplace prior to 2020 (she enrolled EOY 2019).
She collected unemployment due to lost hours.
When she signed up for marketplace she did not anticipate COVID-19 and extra Federal UnEnjoyment. Now the unemployment income has increased her overall income knocking her out of eligibility for the marketplace insurance.
As such, she is now required to repay $1,895 in coverage assistance.

I doubt there is, but, is there anything to be done?

[BP.]

Deductible IRA?

[TaxGuyBill]

As BP mentioned, contributing to a Traditional IRA is the most common method. If you can get her MAGI under 400% of the Federal Poverty Level, any repayment of the credit would at least be limited if she is filing as "Single".

Other possible options: Contribute to a HSA, if the client qualifies. If the client has a business, make sure you are using Bonus depreciation, De Minimis election or §179, and an employer based retirement plan could be another option.


You may want to let the client know that the Marketplace tells her that if there is a change of income or family size, she is supposed to report that to the Marketplace ASAP.

[DoubleO]

Wasn't legislation introduced last week that would keep $10,200 of unemployment from being taxable? Don't know how that would play into 8962 adjusted gross income if it passes. I.e., would it have to be added in like nontaxable SS.

[Anarchrist]

Wasn't legislation introduced last week that would keep $10,200 of unemployment from being taxable?

Looks like it was introduced last September. Hasn't seemed to go anywhere since then so I wouldn't put much hope in it

https://www.congress.gov/bill/116th-congress/senate-bill/4713/text

[New York Enrolled Agent]

Looks like it was introduced last September. Hasn't seemed to go anywhere since then so I wouldn't put much hope in it

https://www.congress.gov/bill/116th-congress/senate-bill/4713/text

That bill was introduced in the 116th Congress. It automatically died on January 3rd when the 117th Congress was sworn in.

[kathyc2]

Clients who utilized the Marketplace for health insurance in 2020 are in for a rude awakening this year as is one of my clients (so far).
Her salary had been reduced due to COVID-19. She was already in the marketplace prior to 2020 (she enrolled EOY 2019).
She collected unemployment due to lost hours.
When she signed up for marketplace she did not anticipate COVID-19 and extra Federal UnEnjoyment. Now the unemployment income has increased her overall income knocking her out of eligibility for the marketplace insurance.
As such, she is now required to repay $1,895 in coverage assistance.

I doubt there is, but, is there anything to be done?

Income does not knock her out of eligibility of marketplace insurance. You can have the insurance regardless of income. The federal subsidies are eliminated after 400% FPL.

If I'm understanding you correctly, she made more on unemployment than working? Now she or you are upset because one gov't program takes away benefit money from another gov't program? Geesh.

[Melesko]

I don't get the impressions that MAJ is upset for not getting benefit money from the gov't. This about getting the tax treatment correctly and doing a good job for his client.

[TAXNJ]

I don't get the impressions that MAJ is upset for not getting benefit money from the gov't. This about getting the tax treatment correctly and doing a good job for his client.

Correct. Some would say is upset for not getting benefit (Their money) money from the gov't and “not is upset for not getting benefit money from the gov't”.

One can always tell who is a good “client” Tax Advisor (looking out legally for the client) by your comment “This about getting the tax treatment correctly and doing a good job for his client.”

[kathyc2]

Hey Jersey, you may need to see a Tax Attorney about that.

[Dude]

I don't get the impressions that MAJ is upset for not getting benefit money from the gov't. This about getting the tax treatment correctly and doing a good job for his client.

Then maybe a heads up earlier in the year would have served the client better.

[TAXNJ]

Then maybe a heads up earlier in the year would have served the client better.

Think that was reply poster Melesko’s point and/or what maybe available to help the client after the fact.

Melesko’s has a good philosophy “This about getting the tax treatment correctly and doing a good job for his client.”

[Dude]

Think that was reply poster Melesko’s point and/or what maybe available to help the client after the fact.

Melesko’s has a good philosophy “This about getting the tax treatment correctly and doing a good job for his client.”

It's not after the fact if it happens again this year. Unless the the words "the first time" are added after "correctly" it is assumed you mean "eventually".

[TAXNJ]

It's not after the fact if it happens again this year. Unless the the words "the first time" are added after "correctly" it is assumed you mean "eventually".

Whatever you say that makes you feel good and/or important since you use the word “assume”.

No one said or implied “It's not after the fact if it happens again this year”. So you can assume all you want.

So, again, Melesko’s has a good philosophy “This about getting the tax treatment correctly and doing a good job for his client.”

[Dude]

Whatever you say that makes you feel good and/or important since you use the word “assume”.

No one said or implied “It's not after the fact if it happens again this year”. So you can assume all you want.

So, again, Melesko’s has a good philosophy “This about getting the tax treatment correctly and doing a good job for his client.”

I knew you would "eventually" agree