In Texas, if the income of my wife and I for the purposes of Obamacare is $15,000 I get zero subsidy. But if it is $16,000 I can get an annual subsidy of over $11,000. The income taxes I would need to pay on the additional $1,000 is a trivial amount compared to the value of the $11,000+ insurance subsidy.
In fact, if my income were $0 the taxes I would pay for $16,000 in income are less than the insurance subsidy.
Great, you say. If I could manufacture income out of the air I wouldn't need Obamacare. Actually, "manufacturing" income may be easier than you think and does not involve making $67.89 per hour on the internet or generating spam.
Now, for someone with absolutely no income and no assets and no access to either this won't help as you will need enough money to pay the taxes on the new income. You would also need money for deductibles, co-pays etc. to utilize the insurance.
But, if your income puts you just below the minimum needed to qualify for a subsidy or, if you have no income but some savings (maybe in your 50's or 60's and trying to hold on until you qualify for SS and medicare) this may be useful.
So, how to get that extra income?
Gambling income. You are legally required to report your gambling winnings but not your losses. Win $1000 one day and lose $1000 the next day. Net cost is $0 but you now have $1000 in additional income. You do report your gambling winnings, right?
Barter. You watch the neighbors kids. They watch yours. Surely you are reporting that barter income? Or financial advice (like this diary!). Note that for barter, money does not need to change hands.
Second Job. If you are near a threshold then a traditional source of additional income is also an option if that is available.
Update: Withdrawing from your IRA. As suggested by pollwatcher in the comments.
The wealthy have many options available for "tax planning" that leverage the tax law to their advantage. Is there an opportunity for the non-wealthy to leverage existing law to maximize their subsidies which for some are a matter of survival? If this approach makes sense, I am sure others can come up with more and better "reverse tax shelters" for this purpose.
What are your thoughts?
Gambling winnings are fully taxable and must be reported on your tax return. ... You may deduct gambling losses only if you itemize deductions. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.
Topic 419 - Gambling Income and Losses
You must include in gross income in the year of receipt the fair market value of goods and services received in exchange for goods or services you provide...If you receive income from bartering, you may be required to make estimated tax payments.I am not a lawyer. I am not an accountant. This is not legal or financial advice. If the idea in this diary works for you for Obamacare it may work against you in qualifying for other government aid. It is my hope that someone with the time and expertise can take this idea and flesh out the details and verify the approach. If anything this diary seems to suggest is not legal, then I am not recommending that you do it. It is entirely possible that I am misinterpreting or misunderstanding something important here. If so, please point it out.
Topic 420 - Bartering Income