Yep! I expect to have to repay some of the ACA subsidy for this year, and next year, I may not be eligible for much of a subsidy at all. I projected my interest income at over $9,000. Even as I am angry about having to pay back the ACA subsidy (for a plan that’s all but unusable), I have to kick myself to be happy about finally earning more than a few pennies in interest.
Hard to believe people would not be cognizant of their interest income, but I guess they could know they’re getting the interest and not realize they have to pull the tax info themselves and include it on the return. But I think most online tax prep software what prompted them to link those accounts.
An even bigger hazard that I didn't hear mentioned is the danger that higher interest will push you over the IRMAA income limit for Medicare premiums 2 years later. That can really cost you. For instance, let's say you do big Roth conversion (smart) and decided to max it out and come right up to the IRMAA limit. For 2023, the limit is $194,000 for a married couple. If you don't allow for a safety margin, even a tiny bit of extra income (like bank interest) can send you over the IRMAA threshold and mean a bigger Medicare premium bill. Recall that 2023's income determines your 2025 Medicare premiums. The first penalty step up takes you from 100% of normal to 140% of normal. Right now, for a couple, going just $1 over the IRMAA limit will mean nearly $1900 in additional Medicare costs in 2025. Yikes! A better idea is to use the current year IRMAA limit for planning, and to stay well on the safe side, just in case you do get extra income you didn't plan for. I'm using $5000 as my safety margin, but even $2000 would be good.
Great point! I am getting more intrest this yr, I knew I had to report it but Do need to include an actual 1099? I usually use online tax forms like Turbo Tax.
Mike I'm with raisin and they send email notification reminders about interest.
Yep! I expect to have to repay some of the ACA subsidy for this year, and next year, I may not be eligible for much of a subsidy at all. I projected my interest income at over $9,000. Even as I am angry about having to pay back the ACA subsidy (for a plan that’s all but unusable), I have to kick myself to be happy about finally earning more than a few pennies in interest.
Hard to believe people would not be cognizant of their interest income, but I guess they could know they’re getting the interest and not realize they have to pull the tax info themselves and include it on the return. But I think most online tax prep software what prompted them to link those accounts.
An even bigger hazard that I didn't hear mentioned is the danger that higher interest will push you over the IRMAA income limit for Medicare premiums 2 years later. That can really cost you.
For instance, let's say you do big Roth conversion (smart) and decided to max it out and come right up to the IRMAA limit. For 2023, the limit is $194,000 for a married couple. If you don't allow for a safety margin, even a tiny bit of extra income (like bank interest) can send you over the IRMAA threshold and mean a bigger Medicare premium bill.
Recall that 2023's income determines your 2025 Medicare premiums. The first penalty step up takes you from 100% of normal to 140% of normal. Right now, for a couple, going just $1 over the IRMAA limit will mean nearly $1900 in additional Medicare costs in 2025. Yikes!
A better idea is to use the current year IRMAA limit for planning, and to stay well on the safe side, just in case you do get extra income you didn't plan for. I'm using $5000 as my safety margin, but even $2000 would be good.
Great point! I am getting more intrest this yr, I knew I had to report it but Do need to include an actual 1099? I usually use online tax forms like Turbo Tax.
Oh gosh. I am have to disclose my $500k per mth