IRMAA and Capital Gains

Financial Planning Tax Strategies
1

MAGI includes capital gains but is it total or net? Will the carry over capital loss mostly from selling an inherited home offset capital gains for IRMAA?

In 2021 there was a surprising amount of distributions with a far amount of it being capital gains. I need to pay closer attention. One investment that has been doing well did around a 30% dividend (not capital gains). There are also ROTH conversions that I have been making before RMDs start and I start collecting Social Security.

Thinking I had a plan for income taxes was optimistic. I need to resist the temptation to put my head in the sand. I need to make certain that federal and state safe harbors have been met and estimate how much in income taxes will be due. IRMAA based on 2021 can’t be changed.

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As frustration is managed I remembered that 2021 income determines 2023 IRMAA which likely will have slightly higher income brackets.

3

MAGI includes capital gains but is it total or net? Will the carry over capital loss mostly from selling an inherited home offset capital gains for IRMAA?

There are multiple types of MAGI, specific to the issue that the income is relevant to. Assuming by the title of the post, you are referring to the MAGI for IRMAA, I would refer you to https://secure.ssa.gov/poms.nsf/lnx/0601101010

A. Policy For MAGI

1. Modified Adjusted Gross Income (MAGI) is the sum of:

• the beneficiary’s adjusted gross income (AGI) (found on line 11 of the Internal Revenue Service (IRS) tax filing form 1040), plus

• tax-exempt interest income (line 2a of IRS Form 1040).

Capital gains on line 11 are net, including any carryover losses that are used to offset current year gains.

AJ

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IRMAA based on 2021 can’t be changed.

I would remind you that there is an appeal process if your income in 2023 will have changed significantly from what your 2021 income was, based on a qualifying life event https://www.hhs.gov/about/agencies/omha/the-appeals-process/…

There are 7 qualifying life-changing events:

Death of spouse
Marriage
Divorce or annulment
Work reduction
Work stoppage
Loss of income from income producing property
Loss or reduction of certain kinds of pension income

AJ

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AJ,

Thank you, I was attempting to make the question more difficult that it is.

The appeal process did work the year I retired. I’m not optimist that it would work for the type of our 2021 income.

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I remembered that 2021 income determines 2023 IRMAA…

I had that problem the first year I was on Medicare. I had a high income for year-2 and greatly reduced income for year-1 because I’d retired that year. I appealed and supplied a copy of my year-1 W-2, and got my IRMAA adjusted commensurately in the month I appealed, with back-dated adjustments.

The promptness of the response, though, was likely due to this all occurring before the pandemic.

Eric Hines