I am 58 and my daughter is 11. I am so confused.My daughter and I receive Social Security Survivors Benefits.For 2014 our income should be $31,008 from Social Security and I have income from Dividends that should be below $2,000.Our total income should be $33,008.I did apply for Health insurance through the Market Place.It was pure heck but finally I was told I would get a subsidy and my daughter’s CHIP dropped from $148 a month to $20 because she also got a subsidy.I never lied and always sent true documentation as they required it.My question is “Will I have to pay the subsidies back?”.My husband passed away in Feb.2013.I filed the 2013 income tax in Feb.2014 and did get a refund from his earnings for 2013.I have read that you can’t get a subsidy if you mostly get your livelihood from Social Security.My financial advisor said I would owe a 10% tax on the income from my subsidies.I am so worried now.Please answer my question.I have talked to the MarketPlace and the IRS and nobody seems to know the answer to my question.The IRS told me as long as I was truthful (I am 100% truthful)in what I said my income is and where it comes from, I will be just fine.In the meantime I am stressing over this bad.I know I have not done anything wrong.
Stressed in Florida
Dear Stressed in Florida,
The good news is, you have no need to stress.
First, you are entitled to subsidies no matter than most (or all) of your income is from Social Security. In fact, Social Security is specifically mentioned as an income source in the Affordable Care Act’s definition of Modified Adjusted Gross Income.
Second, the subsidies that you and your daughter are getting are tax credits, not income. They will not be taxed as income. (See Bloomberg Business Week’s Q &A on this.)
As an aside, the tax refund that you got in 2014 will count as income when you file in 2015. This may bump your income for 2014 higher than you estimated, but may or may not have any impact on your subsidy.