Thanks in advance to your responses. To keep this as short as possible. I do not have regular income. My income is a mix of LTCG selling stock, dividends, interest. My question is can the child tax credit be used to payback the ACA subsidy owed or can it only be used on outstanding tax liability? This is my first year with an ACA subsidy so I've never encountered this.
Married, both of us are under retirement age with two minor children. Currently no earned income and living off taxable brokerage account.
I sold some of an ETF index fund on Friday for a decent long term gain.
Hopefully the formatting comes through properly
$ 137,150 LTCG (Selling Stock, Dividends)
$ -29,400 Standard Deduction (Married Filing Jointly)
$= 107,750 Adjusted Gross Income
$ -94,050 LTCG exemption Married Filing Jointly)
$ =13,700 taxable income
$ 2,055 Fed Tax (15% of the $13,700)
$ +3,177 ACA subsidy payback
$ 5,232 Total Tax Due before child tax credit
$ - 4,000 Child tax Credit ($2,000 per child x 2 children)
$ = 1,232 Total Tax Due
If the child tax credit is not allowed to payback the subsidy, it would break down like this.
$ 2,055 Fed Tax (15% of the $13,700)
$ - 4,000 Child tax Credit ($2,000 per child x 2 children)
$ 0 Tax due before subsidy payback
$ +3,177 ACA subsidy payback
$ 3,177 Total Tax Due
Essentially, if I can't use the child tax credit towards the subsidy payback I will owe $1,945 more.
So the two scenarios play out like this:
If it can be used then I will not sell anymore LTCG and my tax will be $1,232.
If it cannot be used I will sell for an additional LTCG of $13,000 and my tax will be $3,177.
Also, keeping in mind the subsidy is around $10k/year right now so I am only paying back a portion of it. Why in the world is the government subsidizing a household that makes around $140k / year? Moderators please strike this line if it is considered outside of the forum rules.
Thanks again! Hopefully this question will be helpful for others in a similar scenario.
Married, both of us are under retirement age with two minor children. Currently no earned income and living off taxable brokerage account.
I sold some of an ETF index fund on Friday for a decent long term gain.
Hopefully the formatting comes through properly
$ 137,150 LTCG (Selling Stock, Dividends)
$ -29,400 Standard Deduction (Married Filing Jointly)
$= 107,750 Adjusted Gross Income
$ -94,050 LTCG exemption Married Filing Jointly)
$ =13,700 taxable income
$ 2,055 Fed Tax (15% of the $13,700)
$ +3,177 ACA subsidy payback
$ 5,232 Total Tax Due before child tax credit
$ - 4,000 Child tax Credit ($2,000 per child x 2 children)
$ = 1,232 Total Tax Due
If the child tax credit is not allowed to payback the subsidy, it would break down like this.
$ 2,055 Fed Tax (15% of the $13,700)
$ - 4,000 Child tax Credit ($2,000 per child x 2 children)
$ 0 Tax due before subsidy payback
$ +3,177 ACA subsidy payback
$ 3,177 Total Tax Due
Essentially, if I can't use the child tax credit towards the subsidy payback I will owe $1,945 more.
So the two scenarios play out like this:
If it can be used then I will not sell anymore LTCG and my tax will be $1,232.
If it cannot be used I will sell for an additional LTCG of $13,000 and my tax will be $3,177.
Also, keeping in mind the subsidy is around $10k/year right now so I am only paying back a portion of it. Why in the world is the government subsidizing a household that makes around $140k / year? Moderators please strike this line if it is considered outside of the forum rules.
Thanks again! Hopefully this question will be helpful for others in a similar scenario.
Statistics: Posted by Boglemytimberz — Sun Dec 29, 2024 12:56 pm — Replies 0 — Views 27