ACAACAIndexSubsidy rules, calculated
Household income

When a dependent's income counts for ACA MAGI

Include a tax dependent's MAGI only when that person is required to file a federal return, while still reporting application income.

Ruling
PTC household income includes the MAGI of the taxpayer, spouse on a joint return, and each dependent required to file a federal income tax return. A dependent filing only to claim a refund does not automatically make the income count.

Use the filing requirement, not actual filing

Determine whether the dependent is required to file under the year's federal thresholds and income types. Marketplace applications may request all dependent income so the system can apply the rule; do not omit application facts because you expect exclusion.

Revisit investment and unearned income

A dependent's summer wages may remain below a filing threshold while investment income creates a filing requirement. Household income can change even when the dependent does not need Marketplace coverage.

Decision example and mistake

A student files voluntarily to recover withholding but was not required to file. That filing alone does not add the student's MAGI. The opposite mistake is ignoring a dependent's unearned income that creates a filing requirement.

Test each dependent's filing requirement

List every dependent's tax-exempt interest, foreign earned income, nontaxable Social Security, and adjusted gross income. A dependent's MAGI enters PTC household income only when the dependent is required to file a federal return. Filing solely to obtain a refund does not by itself make the income count.

Keep the dependent's return or filing-threshold workpaper with Form 8962 so the inclusion or exclusion of that income is reproducible.

Filing and enrollment checks

  • Determine the dependent's federal filing requirement using current thresholds.
  • Include all MAGI adjustments when the filing requirement is met.
  • Revisit the calculation after summer work, investment income, or Social Security changes.

Continue with

ACA tax household versus the people who need coverageACA MAGI: the income number the Marketplace usesShared custody, tax dependents, and Marketplace savings

Authorities used for this guide