Attorney-at-Law

“OH MAGI, I COULDN’T HAVE TRIED ANYMORE”

In Uncategorized on 08/07/2018 at 17:00

Luis Palafox and Hilda Arellano, 2018 T. C. 124, filed 8/7/18, have a problem with MAGI, but it’s not the lady in the 1971 Rod Stewart – Martin Quittenton lament that ranks 131st on the Rolling Stone 2004 all-time list.

No, this MAGI is Modified Adjusted Gross Income for computing Advanced Premium Tax Credit, that vestigial remnant of the much-contemned Affordable Care Act.

Luis was kicking in $25 per week on a Chapter 13 wage-earner, and wants that offset against MAGI, to cut the bite on the Form 8962 (that Luis and Hilda didn’t file).

Ex-Ch J Michael B (“Iron Mike”) Thornton has this one, and he has sympathy for Luis, but that’s all.

“Although we are sympathetic to petitioners’ situation, the law affords no relief in this circumstance.  There is no evidence to show that the bankruptcy plan payments represent items that are properly taken into account in determining petitioners’ MAGI.  And absent a reduction in their MAGI there is no legal basis for reducing petitioners’ household income for purposes of determining their PTC eligibility.  Although section 36B provides for certain increases to AGI for purposes of determining household income, it does not provide for any decreases to AGI for any purpose.  See sec. 36B(d)(2)(B).  Consequently, petitioners are not entitled to reduce their household income by the amount of the bankruptcy plan payments.  In any event, even if we were to agree with petitioners that their household income should be reduced by the $300 of total bankruptcy plan payments they made during 2014, it would not change the outcome of this case–their MAGI would still be significantly greater than [400% of poverty], and so they still would be entitled to no PTC….” 2018 T. C. Memo. 124, at pp. 7-8. (Footnotes omitted, but one says the payments in the Chapter 13 weren’t allocated even to Section 62 AGI deductions).

He couldn’t have tried any more.

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