Other Tax Questions
Questions and comments on other topics covered in Fairmark.com, such as UTMA accounts, and any tax questions that don't fit our other categories.
determination of medicare premium
Posted by: starfish11040, December 24, 2013 11:25PM
is the income figure used to increase the premium based on the adjusted gross income the one that is reported on your form 1040?

Re: determination of medicare premium
Posted by: Sven, December 25, 2013 01:00AM
Yes, sort of. The relevant number is Line 37 AGI plus any tax free interest reported on 1040 line 8(b). If you start to get close to whatever your line happens to be, be careful, because if tax exempt interest puts you over the line, you will wind up paying increased medicare premiums two years later.

Re: determination of medicare premium
Posted by: MrScrooge, December 25, 2013 01:23AM
Sven is correct and makes an important point.

The IRMAA calculation is based on your AGI plus all tax free interest (notice that any taxable Social Security payments are included in the AGI amount).

The current year tax return for 2013 which will be filed April 15th 2014 (unless extended) will be used to determine Calendar Year 2015 Medicare premiums. Both the Part B and the Part D (prescription drugs) premiums can be affected.

Re: determination of medicare premium
Posted by: Alan S., December 25, 2013 02:02AM
Note that originally the Part B IRMAA MAGI thresholds were inflation adjusted. But included in the ACA was a termination of the inflation adjustments for MAGI as well as the addition of Part D premiums as subject to the surcharge. The result is that many seniors will grow into the surcharge just like they do with respect to the non inflation adjusted AGI amounts for inclusion of SS benefits in taxable income.

Future means testing adjustments to the MAGI and surcharge amounts are also not out of the question.

Re: determination of medicare premium
Posted by: Sven, December 26, 2013 12:32AM
And if you want more good examples of how things that started out as modest taxes increased as Washington's appetite for your money got bigger and bigger, please read "The Greedy Hand" by Amity Schlaes. It came out maybe 10 years ago when she was a WSJ financial reporter.

Re: determination of medicare premium
Posted by: mur44, October 12, 2017 07:39PM
How does one determine if MAGI would be below $170,000 limit when line 8(b) value is unknown. With IRA to Roth
conversion planned in 2017, can I assume that
the value of 8(b) would be same as last year,
namely 2016 tax year? We did not make any significant
changes in investments.

Since MAGI is sum of AGI and 8(b), it seems to me
that investment in a Tax-Exempt Bond Fund would
decrease interest income amount but increase value
of 8(b). Thus, this is not a useful plan.

Are there any ideas as to how to decrease the
value of 8(b)

Re: determination of medicare premium
Posted by: Art, October 12, 2017 08:37PM
How does anyone know what various income categories will be next year? You estimate based on what you know and what you can reasonably expect.

Be aware that many bond funds hold positions in Puerto Rican and USVI bonds (because T/E interest from those bonds are exempt from state income tax.) Hurricane season was nasty for those bonds.


Tax exempt bond funds vary more year to year than your holdings in individual bonds. And since taxable bond interest may show higher MAGI than the same amount invested in tax exempts, investing in T/E will tend to generate lower MAGI than the same investment in taxable bonds.



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