My 64 year old mother in law will need health insurance from Jan 2016 until June 2016 when she is eligible for Medicare. Currently she receives Social security survivors benefits as her only income. Does she need to file a 2014 tax return to be eligible for a 2015 subsidy until she reaches 65, or is she exempt from this requirement since her only income is Medicare? If she is exempt, would the state marketplace (MD) be aware of this and not penalize her for not filing a return?


Answer

Health insurance tax credits are based on Modified Adjusted Gross Income. Social Security survivors benefits only count toward MAGI of tax filers. So is a tax dependent does not have to file then MAGI income for social security isn't counted. This is true for most nontaxable Social Security income.

In the case above she would need to file taxes to have her Social Security Survivors benefits count as income.

The rule of thumb is that if you file nontaxable Social Security benefits count as household income, if you don't file they don't.

Also in general, a person who receives premium tax credits must file. They will need to file an 8962 - Premium Tax Credit Form. A person needs to project to make over the tax filing limit to receive Premium Tax Credits, and while they can potentially make less income and not HAVE to file, they should still file to adjust credits on the 8962.

"For purposes of the premium tax credit, your household income is your modified adjusted gross income plus that of every other individual in your family for whom you can properly claim a personal exemption deduction and who is required to file a federal income tax return. Modified adjusted gross income is the adjusted gross income on your federal income tax return plus any excluded foreign income, nontaxable Social Security benefits (including tier 1 railroad retirement benefits), and tax-exempt interest received or accrued during the taxable year. It does not include Supplemental Security Income (SSI)." - IRS

Learn more here.

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Debbie Twardzik on

I am so confused! I spoke with some from your customer service dept. today that told me that me and my son’ s survivor benefit would be counted as income?? which statement is right???

ObamaCareFacts.com on

It makes sense that you are confused, the answer we gave was not detailed enough. We are updating the answer, but in the meantime it is: Social Security Survivor Benefits count as MAGI if the person has to file taxes.

Dependents who have income above a certain amount ($6,100 in earned income and $1,000 in unearned income in 2014) must file their own tax return even though someone else claims them as a dependent. (Social Security benefits don’t count toward these thresholds.)

So if you file with your son and that is his only income than he can elect not to file taxes and then you guys don’t have to count that income. If you want to count the income for some reason, then he should file. Only the head of household has to file to get marketplace tax credits. If you are trying to apply for Medicaid, and the state expanded, then not filing taxes and thus not claiming the income may be better as that will net you a lower household income.

Does this help?

Mark O'Reilly on

This answer helped me tremendously.
Thank you.

Mary on

I’m a widow, found a broker said I don’t have to claim Survivors Benefits as income, I received 1220.00 thru having to finance our business, which ends 2025 ! Last year Market Place considered my Survivors Benefits as income, I can’t afford the new premium w 6500.00 deductible! So is he correct saying w1220.00 I don’t make enough , and don’t have to claim Survivors Benefits?

Erin on

You have to file taxes for the Premium Tax Credit and Survivors Benefits do count toward your MAGI if you file taxes. If you had dependents receiving Social Security Benefits, their benefits aren’t counted towards the families MAGI unless they meet the dependent tax filing threshold ($6,300 in 2016).

Jena on

Do you use soul survivors benifts as income when applying for health insurance

Kyle gagnon on

If my servivers benifets for tax season is 6000$ for net pay can i apply for taxes if its servivers benifets