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I’m divorced and I pay alimony to my ex-spouse. Should I deduct that from my income in determining my eligibility for subsidies?

For divorces after December 31, 2018, alimony payments are no longer deductible for the paying spouse and alimony is not included as income for the recipient spouse.

For pre-2019 divorces, old tax rules apply.  The paying spouse can deduct alimony payments from income and the recipient spouse must report alimony payments as income on the federal tax return.  However, divorced couples have the option of modifying their pre-2019 divorce agreement to adopt the new tax rules.

What income is counted in determining my eligibility for premium tax credits?

Eligibility for premium tax credits is based on your Modified Adjusted Gross Income, or MAGI. When you file a federal income tax return, you must report your adjusted gross income (which includes wages and salaries, interest and dividends, unemployment benefits, and several other sources of income.)  MAGI modifies your adjusted gross income by adding to it any non-taxable Social Security benefits you receive, any tax-exempt interest you earn, and any foreign income you earned that was excluded from your income for tax purposes.

Note that eligibility for Medicaid and CHIP is also based on MAGI, although some additional modifications may be made in determining eligibility for these programs. Contact your Marketplace or your state Medicaid program for more information.

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