Good morning. I currently make $3250 a month NET. After withholdings like Taxes, SS, Medicare etc, I receive $2632.08. Of that amount child support is automatically taken out in the amount of $1311.54 which is 50% of my current salary.
I get the burden of paying taxes on the child support. I get that. What I don’t understand and I need your help in understanding is that, true I make $3200 net, or $2632.08 gross, but I only take home $1311 to live. If I only have $1311.54 to live on and it is required by law to have health insurance, but I only qualify for $48 per month tax credit because on paper I Net $3250 , how can I get health insurance? The way this is set up forces me not to have health insurance hence forcing me to break the law and get fined. I have not had health insurance since my divorce three years ago.
I would like health insurance, I would like to follow the law, but I also have to live. Please help me understand my options if in fact everyone under this act should be able to afford health insurance. I can’t!
You qualify for ObamaCare subsidies based on MAGI, Modified Adjusted Gross Income. You pay taxes on child support, therefore it's not a deduction to qualify for cost assistance. However, the money you claim after taxes (adjusted income), after adding a few items in, is used to apply for cost assistance. The Marketplace is only helping you estimate your tax credit. You can adjust your information to account for your actual MAGI if you think the credit is too low.
Child support payments received by a household for the support of a child in the household are not counted in determining the family’s gross income for tax purposes. The parent paying the child support likely already paid taxes on the income being paid as child support. Alimony is treated differently. The person paying the alimony gets to deduct it from his or her gross income to determine AGI and the person receiving the alimony payments counts it in his or her gross income for tax purposes. - HealthCare Reform Beyond the Basics