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I am a divorced woman who filed last two years. My income

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I am a divorced woman...
I am a divorced woman who filed for obamacare for the last two years. My income which comes from alimony that I receive monthly is 21,000 a year. I have a 401 K of which I borrowed 20,000 last year to pay off debt, when I filed my income tax last year with H & RBlock, I was told I had to pay back the subsidy I received for health insurance, I was shocked to learn that I had to pay $6,000 back to the government, I was not aware that the subsidy had to be paid back or that the 401K was considered income. Yikes, I nearly had a stroke about the $6,000 and that I had to borrow more money from the 401K to pay Uncle Sam!! Is the 401 K considered earnings and will I have to do that again this coming tax year
Submitted: 1 year ago.Category: Tax
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Customer reply replied 1 year ago
Also, the alimony I receive was cut in half in June, I am so scared as to what I can and should do. Is there a certain age when I have to take the 401K money and do I have to claim the full amount as earnings or just what I took out to pay debt?
Answered in 16 minutes by:
1/11/2016
Tax Professional: Robin D., Senior Tax Advisor 4 replied 1 year ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,892
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello

The 401k is considered taxable income. You must begin taking out when you turn 70 1/2 but any amount you take out is added to your income. You are only taxed on distributions (amounts you take out).

If your year end income exceeds 400% Federal Poverty Level (FPL), you will have to return the total amount of Advanced Premium Tax Credits you received.

The amount is limited to certain amounts insuring you can’t owe more than you can afford if you received too many Advanced Premium Tax Credits. Your income with the additional $6000 is still in the At least 200% FPL
but less than 300% for repayment.

You would be limited to $750 of pay back. If your alimony was cut that much then you are in a much lower income amount. That could mean no repayment of obama subsidy.

Still tax on your income that is left after exemption and deductions but no repayment.

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Customer reply replied 1 year ago
Sorry Robin, I am not following, just had treatment, how much is FPL and what do you mean by 200% but less than 300%?
Tax Professional: Robin D., Senior Tax Advisor 4 replied 1 year ago

Federal Poverty Levels (which are also called Federal Poverty Guidelines, Federal Poverty Line, or simply FPL) are used to see if you qualify for cost assistance when buying insurance through the State or Federal Health Insurance Marketplace.

If you make between 100% – 400% of the Federal Poverty Level you may qualify for premium tax credits on the Health Insurance Marketplace.

By that same thinking, if you report that you are on a lower level of income and receive assistance but when you file you have a higher income (like your 401k distribution) you have to pay some of that assistance back.

That is what happened to you last year.

You should be fine this year though.

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Tax Professional: ShawnA, CPA, Professor, CFP. CGMA, Business Consultant, Professor, PFS I have decades of experience answering these questions. replied 1 year ago
ShawnA
ShawnA, CPA, Professor, CFP. CGMA, Business Consultant, Professor, PFS I have decades of experience answering these questions.
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Tax Professional: Robin D., Senior Tax Advisor 4 replied 1 year ago

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