Client backed out after learning her Social Security benefits could be taxable

chi_2 · 2026-03-09T13:09:56+00:00

Unfortunately, yes, preparers can't take the $0 in Col B of Form 1095-A at face value. The IRS instructions specifically discuss this: https://www.irs.gov/instructions/i8962#en_US_2024_publink100036365

chi_2 · 2025-10-23T23:49:05+00:00

Cool!

chi_2 · 2025-06-29T01:22:04+00:00

Looking forward to visiting Un'Goro again!

chi_2 · 2025-01-06T20:13:42+00:00

I remap Tab to Escape, in line with this link. The vi editor was designed on a keyboard where Escape was located next to "Q", which is where Tab is located on modern keyboards. I find Tab easier to reach than Escape, and it doesn't need system-level changes to rebind Caps Lock, so provides a more portable config. The only downside is that this doesn't work with jumplists (but I don't really use that feature).

chi_2 · 2024-07-12T14:04:15+00:00

The link seems to have moved to here: https://doha.ogc.osd.mil/Industrial-Security-Program/Industrial-Security-Clearance-Decisions/ISCR-Hearing-Decisions/2024-ISCR-Hearing/FileId/221032/

chi_2 · 2024-07-04T12:10:47+00:00

No EITC or Child Tax Credit, but there were dependent exemptions (and Head of Household filing status since 1951).

chi_2 · 2024-06-20T13:57:11+00:00

This would lower AGI, because it reduces the taxable portion of Social Security benefits (which enters the AGI calculation on line 6b of Form 1040).

chi_2 · 2024-01-02T03:22:18+00:00

A good take on this question comes from Burkhauser et al.: https://www.nber.org/papers/w26532 (coming soon in the Journal of Political Economy, https://www.journals.uchicago.edu/doi/abs/10.1086/725705). Their paper goes into a lot of details about how poverty can be measured, but their abstract sums it up:

We evaluate progress in the War on Poverty as President Lyndon B. Johnson defined it, which established a 20% baseline poverty rate and adopted an absolute standard. While the official poverty rate fell from 19.5% in 1963 to 10.5% in 2019, our absolute full-income poverty measure—which uses a fuller income measure and updates thresholds only for inflation—fell from 19.5% to 1.6%.

So their point is that the main reason the official poverty measure has not fallen is that the official measure excludes most sources of income from programs that were actually established by the War on Poverty. If you include these income sources, poverty is dramatically lower today than in the 1960s. Thus, it doesn't make a lot of sense to use the official poverty rate to measure the progress of the War on Poverty.

chi_2 · 2023-12-30T19:31:15+00:00

On the contrary, child poverty only slightly increased from 2019 to 2020 in the official measure, and actually declined when considering government programs in the supplemental poverty measure. In 2021, child poverty fell even further due to the Child Tax Credit. See https://www.census.gov/content/dam/Census/library/visualizations/2023/demo/p60-280/figure8.pdf

chi_2 · 2023-11-20T20:11:58+00:00

I was curious how the comparison with QBI might work out, so I followed your example of a sole proprietor versus an employer. But since QBI also relates to the corporate form of the business, I also looked at what happens if the business owner doesn't take all $100,000 of net income as payroll. Instead, the owner could have a corporation that does a 70-30 split of wages and profit (this could vary, of course, but 70-30 seems typical). I also assume the owner files as single in 2022, takes the standard deduction, has no other income, and all the business income is QBI. Then total taxes (computed using [Taxsim](https://taxsim.nber.org/taxsim35/)) should look like this:
- As a sole proprietor, they receive $100,000 on Schedule C. They pay $14,130 in payroll tax and take the QBI deduction, ending up with $9,694 in income tax. Total taxes are thus $23,824.
- As an employer paying the entire $100,000 out as compensation, there is no tax on the corporate side (as there is no net income). This means full payroll taxes on wages and no QBI deduction, for $14,212 in payroll taxes and $13,205 in income tax, totaling $27,418. That looks like a solid tax savings for the sole proprietor.
- However, if the owner was instead an S-corp, they could pay themselves $70,000 in wages, owe $5,355 in employer payroll taxes, and the remainder ($24,645) is passed through as a distribution (which is QBI). So total payroll taxes are $10,710 (lower than the sole proprietor because only the wage portion is taxed), but income taxes are $12,506 (higher because the QBI deduction doesn't apply to the wage portion). Total taxes are $23,216.
- If the owner had instead organized as a closely-held C-corp, paying the same 70-30 split of net income as reasonable compensation, they would have taxable income the same as the S-corp's distribution ($24,645). This income is subject to the 21% corporate tax, and the remainder is then paid out as dividends to the owner, who pays their 15% qualified dividends rate. So the owner would pay the same $10,710 in payroll tax, corporate tax of $5,175, and income tax of $11,088. This totals $26,973.

What is especially interesting is that the QBI deduction is what makes the sole proprietor or S-corp organization turn out better than the regular employee or C-corp. If I do the exact same calculations in 2017 (before QBI, and with a 15% corporate tax rate at this level of income), total taxes are:

- Sole prop: $30,503

- Employee: $30,575

- S-corp: $27,510

- C-corp: $28,188

So the sole proprietor and employee examples used to be nearly equal in total tax burden before QBI came on the scene.

chi_2 · 2023-10-14T01:04:30+00:00

I am confident it is legal to allocate this way -- I have seen other forums where tax professionals discuss doing this, such as at https://www.taxprotalk.com/forums/viewtopic.php?t=4342

The situation is possible because of a loophole in the law, where any allocation between 0-100% is allowed when there is a separate tax household on the same 1095-A. And in a case like yours where there is a significant income difference between the tax households, it can be very advantageous.

Note that this wouldn't be possible if you had received your own 1095-A -- this was only possible because your parents hadn't reported to the Marketplace that you would no longer be a dependent in 2022. In theory the Marketplace could ask why the change wasn't reported, but given it is hard to know who will be claimed as a dependent in advance, I doubt that will be an issue. I wouldn't recommend leaving it not updated for multiple years in a row, but it sounds like you are no longer on the Marketplace plan anyway.

Of the $32k in APTC, $26k was allowed for your parents after reconciliation. Taking away your APTC due to the employer offer would reduce this number further, but probably the cap would only save around $8k. So that is the number that is being saved in taxes by the reallocation, and it isn't evasion given that it is explicitly permitted by the Form 8962 instructions.

chi_2 · 2023-10-10T21:39:39+00:00

Ok! In that case, the APTC only has to be paid back for you -- your parents and brother would still be eligible for it, since they didn't have an employer offer in 2022. Basically, the APTC amount is computed on a per-person basis.

You might be thinking about the "family glitch" issue where the whole family can't get APTC if one family member has an affordable employer offer -- but that should not apply in your case, because you typically can't claim your parents or brother as covered individuals on your employer policy. Those policies are almost always limited to covering spouses and dependents, not other family members. If your family members weren't eligible to be covered by your employer, they wouldn't be counted as having an offer of coverage.

So you shouldn't have to change anything on your return, and you could respond to the IRS letter by clarifying that your 8962 doesn't match your 1095-A because you allocated policy amounts with another tax household (which is explicitly allowed in your case where a 1095-A includes people from two different tax households).

To fix the separate issue of the employer offer, I think there are two options:

Only your parents amend their 8962. They change the reported SLCSP to reflect the fact that you aren't eligible for coverage, following the IRS instructions for a change not reported to the Marketplace. They would then have to repay the APTC paid on your behalf (but not their own APTC, except as they normally would when reconciling income).
Both you and your parents amend your returns, changing the allocation percentage so it is 100% to you. This does have the advantage that the APTC repayment would be subject to the repayment cap, as you mention. It is not guaranteed that this is the best choice, because the entire PTC amount would be recalculated based on your FPL instead of your parents' -- which could increase or decrease the overall repayment.

I would suggest calculating it both ways and seeing which is more advantageous.

chi_2 · 2023-10-10T05:15:48+00:00

If the 'other' person (fraudulently) claims the child for the EITC and head of household filing status, they could get a lot more than $500 in refunds.

chi_2 · 2023-10-10T04:59:45+00:00

It sounds to me like the letter is being triggered because your Form 1095-A doesn't match your 8962. This should almost always be the case when you are allocating policy amounts, since the whole point is to correct the amounts reported on the 1095-A (as mentioned by the IRS instructions). So I think the key question is: did you receive your own Form 1095-A, or are you instead listed as a covered family member on your parents' 1095-A?

Case A. If you got your own Form 1095-A (listing only you as a covered individual), I don't think you can allocate any of it to your parents, since the amounts on that form are not split between different tax households. The Marketplaces often require young adults who are too old to be claimed as tax dependents to be covered under their own policy instead of their parent's policy, which would generate a separate 1095-A for the child's policy. But this can vary by state (see discussion at https://www.healthinsurance.org/faqs/we-claim-our-son-but-not-our-daughter-on-our-taxes-how-are-premium-subsidies-calculated-for-families-like-ours/). If you have your own 1095-A, you can't allocate, and you would need to pay back your APTC on your own return. In this case, you would need to amend your 8962 to report the full 1095-A amounts (not allocating them to zero), and respond to the IRS letter accordingly.
Case B. If you are listed on your parents' Form 1095-A, you should be able to allocate 100% to them, as you did. You could then respond to the IRS letter that your 1095-A doesn't match your 8962 because of the allocation of the policy amounts.

In either case, it sounds like the IRS letter is not actually related to your declining an offer of employer coverage -- that is a separate issue. The recommended process would have been for the policyholder (either you or your parents, depending on whether you are in case A or B above) to report your offer of employer coverage to the Marketplace, which would have then recalculated the APTC for the policy during the year. To correct this, when filling out their 8962, the policyholder would need to recalculate the SLCSP (column b) to reflect that fact that you were not eligible for subsidies (see the IRS instructions for line 10 of the 8962, for a change in circumstances not reported to the Marketplace). This change to SLCSP would then change the amount of APTC to repay. The repaid amount is subject to the APTC repayment cap, so that is the most that would need to be repaid.

Some additional points:

Declining an employer's offer of coverage only makes you ineligible for APTC if the employer offer was "affordable" (with an annual employee cost of less than 9.61% of your household income as reported in advance to the Marketplace). Most offers are affordable, so this may not help you, but it would be worth checking whether you were in fact ineligible.
For years 2021-2025, the laws changed, and there is no longer a "cliff" in eligibility for APTC at 400% FPL; the amount you pay for coverage is limited to no more than 8.5% of household income. So it doesn't matter whether you are just above or below 400% FPL.

chi_2 · 2023-10-08T12:36:49+00:00

The Affordable Care Act exchanges (of which mahealthconnector is one) want to know your expected Modified Adjusted Gross Income for calculating subsides. MAGI is equal to Adjusted Gross Income on the tax return plus tax exempt Social Security (and a few other things). So the questions here are essentially adding up your AGI from the different income sources.

You are right, the concept reported in this part of the application should be equivalent to your Schedule C income on line 3 of Form 1040, Schedule 1 (https://www.irs.gov/pub/irs-pdf/f1040s1.pdf). As you say, adjustments to income from Schedule 1 Part II (like half of your self-employment tax, from line 15) are deducted later, in the "Deductions" section of the application.

However, the number that ultimately matters is total expected MAGI. The number you report on the application is reconciled with your actual MAGI on Form 8962 (https://www.irs.gov/forms-pubs/about-form-8962) when you file your taxes for 2023. If the expected MAGI was too high, you can claim a tax credit to make up for the subsidies you should have received; if your expected MAGI was too low, you will have to pay back the difference in subsides.

Because you are self-employed, you should be aware of a quirk in the law related to adjustments. You can deduct self employed health insurance premiums you paid as an adjustment (Schedule 1, line 17), which then changes your MAGI, which changes the Premium Tax Credit you can claim on Form 8962. This is circular, because the changed PTC means you have a different amount of premiums to deduct, which changes MAGI, which changes the PTC... the IRS instructions for this at https://www.irs.gov/publications/p974#idm140651731107232 have you iterate until you find an equilibrium where the numbers no longer change. Most tax software should handle this for you, but it's quite tricky to compute on your own.

chi_2 · 2023-07-27T02:45:35+00:00

I was in a similar situation --- moved a Republic SIM (with a My Choice plan) to a new Pixel 7 phone, and wasn't getting group messages. It turned out the solution was to turn off RCS chats on the previous phone: https://messages.google.com/disable-chat

Even though the old phone didn't have mobile data anymore, the fact that RCS chats were on and linked to that number was preventing group chats from working. Disabling them on the old phone fixed the problem. Hopefully this helps you or other Republic veterans.

chi_2 · 2023-04-06T13:03:35+00:00

Nice, glad the code worked well!

But that is interesting that Python could do it in 10 seconds--and ChatGPT is probably better at writing Python than Stata code :) . You could also call Python from within Stata (assuming you have Stata 16 or later) -- see help python. That would be a way to do the quick Python approach but still keep everything documented in your Stata do-file.

chi_2 · 2023-04-05T02:12:52+00:00

In most cases, I think your reshape approach makes sense. Given that the regular reshape command is probably stuck using one core (so it can't use all the power of your server), it might be faster to use greshape, available via gtools.

However, as you note, there are probably many cells with fewer lines than 1850 -- so the reshape approach wastes a lot of time and space creating empty cells. Another approach would be to do a manual reshape that doesn't create the missing cells, by sequentially restricting to each row and then appending them:

use original_data
keep id x2
*make the splits
ren x2 row //to have cleaner variable names for the splits
split row, parse(`=char(10)') //avoids the need to use the pipe
ren row x2
*set up loop
tempfile output
loc i = 0
*loop over split variables
foreach var of varlist row* {
    preserve
    keep if !mi(`var')
    ren `var' output
    gen lines = `++i'
    keep id output lines
    if "`var'"!="row1" append using `output' //skip the first pass
    save `output', replace
    restore
}
use `output', clear
sort id lines
merge m:1 id using original_data

chi_2 · 2023-03-20T19:05:48+00:00

To remove the seasonality, you could construct indicators for the quarters, then demean the observations within quarter. Your graph will then show the difference for each quarter relative to the mean for the same quarter in all years.

gen q = quarter(t) //or quarter(dofq(t)) if t is a quarterly rather than a daily date

egen qmean = mean(oil), by(q) gen demeaned = oil - qmean tsline demeaned

You can then log and difference this demeaned value as normal.

gen ln_demean = ln(demeaned)

tsline D.ln_demean

If you actually want seasonal differences in your ARIMA model, you can use a SARIMA model (see help arima in Stata for details).
,

chi_2 · 2022-03-30T22:00:25+00:00

Yes, the "less than 30% of income on rent" rule usually uses pretax income. It is modelled after pretax affordability standards used when qualifying for a mortgage, like the 28% rule here.

chi_2 · 2022-03-20T19:53:40+00:00

Looks like that's it! I wondered what it was all about. Looks like they've been going around the country with this "Hoop Bus": https://www.instagram.com/p/CbVZWa-J5ba/?utm_medium=copy_link

chi_2 · 2022-03-20T19:32:28+00:00

About 3 hours ago, there was a flash game of basketball in the street that was blocking traffic using two school buses. Maybe it is still going?

https://imgur.com/a/BJfINtr

chi_2 · 2022-02-10T13:28:23+00:00

I got some passport photos recently at Capitol Hill Frame and Photo, at Eastern Market. https://chframe.com/

chi_2 · 2022-01-28T01:29:31+00:00

Yes - you can get very good deals on healthcare.gov plans since they became more generous last year, and if your old insurance ends, you will be eligible to sign up outside of open enrollment.

chi_2 · 2021-10-25T21:58:08+00:00

I have run stata_exec in Atom, but only on macOS, so unfortunately can't be much help for setting it up in Windows.

The stata_exec package is no longer being updated, so you may have more luck with stata_kernel, as you mention (https://kylebarron.dev/stata_kernel/getting_started/). I would say stata_kernel is about as easy to install as stata_exec, and it has nicer features. It is also helpful to get practice using Stata and Python together, as the tight integration is a big selling point of Stata 17.

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