We, myself and spouse, will make ~ $40000 this year. I’m retired and she will retire April 2 this year.
We both have medicare and will lose our Employer’s health insurance plan when my wife retires.
How does the $1209.00/month tax credit for health insurance work?
– Do we have to pay for insurance and then be reimbursed or will Obamacare pay for the insurance on a monthly basis?
– How does this affect our taxes filed for 2015?
If you have access to Medicare then you can't get a Marketplace Tax Credit. Medicare has it's own cost assistance and deductions based on income. At your income amount you don't qualify for Medicare cost assistance, and you won't pay more for Part B premiums.
There is a yearly, not annual $12000 standard deduction limit for Medical expenses.
This applies if you don't itemize your deductions (many older folks don't if they are no longer paying mortgage interest). Anyone who is 65 and older by December 31 of the tax year is entitled to a higher standard deduction. Technically, you are considered 65 on the day before your 65 th birthday so you can take the higher standard deduction if you turn 65 by January 1st.
People age 65 and older (or blind) get an additional standard deduction of $1,200 for married taxpayers and $1,550 for single filers (2014). You can claim the higher deduction if only your spouse is older than 65 and you file a joint return.
To learn more about tax deductions for seniors, see Nolo's Essential Retirement Tax Guide, by John Suttle, CPA and Twila Slesnick, PhD.