How is "Household Income" Calculated?

 

There are TWO different calculations of "household income" which apply for different purposes. Both are defined below.

Household Income Definition for Purposes of Claiming An Exemption For Unaffordable Health Coverage, Claiming an Exemption for Individuals With Household Income Below the Tax Filing Threshold and Calculating the Shared Responsibility Payment (Tax Penalty)

Household income is defined as your modified adjusted gross income (MAGI), plus the MAGI of ALL other individuals in your home who are taken into consideration of the "family size" and are REQUIRED to file a federal income tax return. See Exhibit A below.

"Family size" is based on the number of individuals for whom you claim as a dependent on your income tax return. What does this mean for a typical family of four with children working part-time summer jobs? This means that in addition to considering the parent's joint income tax return MAGI, the parents must also consider the children’s MAGI from their respective income tax returns if the children are REQUIRED to file a tax return.

Exhibit A - Household Income
(Do NOT use this formula for "Premium Tax Credit" purposes)
   Adjusted Gross Income (AGI)
+ Tax-Exempt Interest
+ Foreign Earned Income That Was Excluded From Your Tax Return
= Modified Adjusted Gross Income (MAGI)
+ MAGI of Your Dependents' Who Are Required To A Tax Return
= Household Income

 

Household Income Definition for Purposes of the "Premium Tax Credit"

Household income is defined as your modified adjusted gross income (MAGI), plus the MAGI of ALL other individuals in your home who you claim as a dependent and are REQUIRED to file a federal income tax return. See Exhibit B below.

MAGI for purposes of the premium tax credit is defined as adjusted gross income (AGI) plus tax-exempt interest, plus nontaxable Social Security benefits (including tier 1 railroad retirement benefits) and income excluded under the foreign earned income exclusion. It does NOT include Supplemental Security Income (SSI). See Exhibit B below.

Exhibit B - Household Income
(Use this formula ONLY for "Premium Tax Credit" purposes)
   Adjusted Gross Income (AGI)
+ Tax-Exempt Interest
+ Nontaxable Social Security Benefits & Tier 1 Railroad Retirement Benefits
   (Do NOT include SSI payments)
+ Foreign Earned Income That Was Excluded From Your Tax Return
= Modified Adjusted Gross Income (MAGI)
+ MAGI of Your Dependents' Who Are Required To A Tax Return
= Household Income

 

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