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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4020
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I am a retired Police Office that went out in 2001 due to an

Resolved Question:

I am a retired Police Office that went out in 2001 due to an Industrial Disability and receive a tax free (1099R) pension of roughly 40,000 a year. I have no medical insurance and until "Obama Care" have actually received a letter refusing me insurance. They claimed my injury was the reason. CALPERS own that injury forever. My questions now are: What is my income to apply for the healthcare act? Do I list my income as to what the 1099R says or what my adjusted gross comes out to that is taxable?

Submitted: 9 months ago.
Category: Tax
Expert:  Stephen G. replied 9 months ago.

Stephen G. :

Hello, my name isXXXXX & I'll be helping you today. My goal is to give you a complete & accurate answer that you can understand.

Stephen G. :

According to the definition of "Modified Adjusted Gross Income" only the taxable part of your pension would be included in the definition. Here's a link that explains the computation of "Modified Adjusted Gross Income" for purposes of the Affordable Care Act.

Stephen G. :

http://laborcenter.berkeley.edu/healthcare/MAGI_summary13.pdf

Customer:

That much I do understand. Because my pension is sent 1099R (Roughly $40,000 a year) and is non-taxable do I use that number for the affordable healthcare OR what my Modified adjusted is...that was $152.00 last year

Stephen G. :

The 1099R indicates that your pension is non-taxable doesn't it?

Customer:

if 152 I am under 1% of the US in the poverty section. Homeless live on more than that

Customer:

it does

Stephen G. :

Did you look at the link yet?

Customer:

I have it already but a bit confusing to me

Stephen G. :

In what way; pension income is explained there?

Customer:

Im looking at my last years tax. Distrubition code is 3

Customer:

Do I use the under 200 number when applying for affordable health care?

Stephen G. :

Basically, it shows that you start with Adjusted Gross Income (it shows all the things that are included in that as well as deducted from gross income); then below it shows what you must add to the adjusted gross income figure for the line that's applicable to your return (or the what the number would be if you filed a return).

Stephen G. :

I'd have to recheck code 3 but isn't it non-taxable disability ?

Customer:

I get confused because I include my 1099R was income / pension recieved but 3 makes than non-taxable income. I end up being taxed on interest and things like that, nothing else

Customer:

yes 3 is non-tax industrial disability

Stephen G. :

What's in box 1 & 2?

Stephen G. :

sorry 2(a)

Customer:

exact amounts:
38,212

Customer:

185

Stephen G. :

185 is in 2(a)?

Customer:

yea 2a $185

Customer:

Now you see my confusion? LOL

Stephen G. :

So whatever that is has been deemed taxable; must be some other benefit

Stephen G. :

no 2(a) is the taxable amount

Customer:

Interest earned that sort of thing

Stephen G. :

So on your 1040 you would list 38,212 in box 16(a) & 185. in box 16(b).

Customer:

I have and or keep no bills

Stephen G. :

So, the 185. would be included in your adjusted gross income which won't affect anything.

Customer:

I do a 1040A no deductions

Customer:

other than the standard

Stephen G. :

I don't see why you are confused; sorry?

Stephen G. :

If you look at the chart, it clearly shows what line you start with on the return you file.

Stephen G. :

Are you married?

Customer:

no

Customer:

Let me see maybe it didnt get the entire doc when I was there yesterday

Stephen G. :

Do you receive Social Security Disability or regular Social Security benefits (not sure how old you are).

Customer:

I'm 51, retired at 39. Never had a job that paid SS. I was Military then Law Enforcement

Stephen G. :

OK, so there's no adjustment there.

Stephen G. :

The only reason your pension isn't included is because it isn't taxable; if the total was in box 2(a) on the 1099 you would have to include it.

Stephen G. :

Do you even have to file a return?

Customer:

My question because I fall into such a small group is what do I claim as my income? It seems that is is the adjusted but that seems SOOOO wrong

Stephen G. :

Why?

Stephen G. :

If that's wrong, your disability should be taxed.

Customer:

Yes I file every year and actually got back $13 last year from State due to my vehicle reg

Stephen G. :

OK, are you in CA?

Customer:

Yes In CA

Customer:

CALPERS Industrial Disibility

Stephen G. :

What does CALPERS stand for? I get the CA..................

Customer:

California Public Employees Retirement System

Customer:

This question even stumped them over the 1099R vs. W2

Stephen G. :

OK so CAL is California; that's what was throwing me......thought the "L" might be Law as in Law Enforcement

Customer:

I was Law Enforcement

Stephen G. :

I know --------- at this point, you should qualify for the maximum subsidy

Stephen G. :

the premium should be quite low

Stephen G. :

I'm amazed that your disability retirement doesn't include a medical benefit;

Customer:

Our contract was if Industrial Disability, 50% of base pay with 2% cost of living for life

Customer:

My association was greedy and wanted money now with no after thought. They nver went for medial

Stephen G. :

Just for information; how does a police officer get an "industrial" disability?

Stephen G. :

Sure, back then, medical insurance was no big deal.

Customer:

By getting kicked of a 5 story building and surviving

Stephen G. :

OMG, I was thinking a "line of duty" injury would be different but I guess not in CA

Customer:

"Industrial" is defined as a one time incident that prevents you from ever going back to your former position

Stephen G. :

Wow, how long were you in the hospital?

Stephen G. :

I hope someone shot the bastard that was responsible for that;

Customer:

LOL Which time? 15 surgries over 5 years to put me back together and NO ONE will take me in health insurance now. Even the VA dropped me because I served in the wrong time frame to be included

Stephen G. :

Well the Affordable Care Act should fix that problem.

Customer:

I took the meth freak with me. I landed on him and I survived. His meth addiction end then and there. LOL

Customer:

It should and can...but which number do I tell them as income? 40 or 185?

Stephen G. :

Well, I guess that's something; at least you lived to tell the tale; unreal;

Stephen G. :

185., just follow the chart;

Stephen G. :

185 + whatever else is taxable, if anything;

Customer:

The 185 was the highest taxable. Go with that?
So many others only mention W2 but I only get the 1099R and can't find that specifically mentioned

Stephen G. :

It is mentioned where it says "Pension"; all pensions are supposed to be reported on 1099-Rs

Stephen G. :

No matter what they come from; even annuities get reported that way;

Customer:

And we both know pension and disability and in CA Industrial disability are all very different animals

Stephen G. :

W2s are only generated from providing services - actual current work

Customer:

So in your professional opinion use the highest taxable income there is in my case and I should be fine?

Stephen G. :

Well they may be different but the taxation of all of them are reported the same way on a 1099-R

Stephen G. :

They used to be reported on a W2-P, which caused even more confusion;

Customer:

These days the only thing more confusing than this is Googles new terms of service

Stephen G. :

There's nothing else you can do except follow the guidance provided by the chart; who knows what might get changed down the road; but I can't imagine they are going to pick on those types of disabilities; in theory they would have to make them taxable first; I don't think that's likely.

Stephen G. :

Try working with the tax code; I couldn't deal with it full time anymore so I retired; I doubt they will ever be able to pass any significant changes in the tax code no matter who promises to simplify it; they've been saying that since I passed the CPA exam in 1970. They even have examples going back to the 1920s when it was a 1 page form, period.

Stephen G. :

It was too complicated for them then on day 1 in 1916.

Customer:

TY Sir. You have given me at least an answer. I will wait for the deadline to see if cases like mine ever get specifically mentioned. For now I have a number to work from

Stephen G. :

In those days, finishing high school was a rare achievement.

Customer:

lol true

Stephen G. :

Don't wait until the last minute; give them another month at the most; the coverage will be effective Jan 1, 2014.

Customer:

My Grandfather never finished high school and was a bomber pilot in WWII

Stephen G. :

I'll leave my contact information here in case you want to reach me again.

Stephen G. :

If you need to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Thanks again for using us for your tax and financial questions. You may get a short survey from the site; if it isn't too much trouble I would appreciate it if you would answer it; the survey results are used to rate our performance;

Customer:

Thats where my brain was going too. Cut it close and give them numbers. If I'm wrong some bean counter will contact me. I just had no desire to pay more than what was needed if I didnt have to

Customer:

If I paid too much...no one will contact me ever

Stephen G. :

Careful what you say about "bean counters". >00<

Customer:

I can only count to 21 and have to be naked. Thats why I go to the experts

Customer:

TY again!

Stephen G. :

Well, I guess you have all your fingers & toes & important equipment still

Customer:

LOL

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4020
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and 3 other Tax Specialists are ready to help you

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