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gk10002000

Does the USA VA use MAGI or AGI for Income Tests

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So the question is does the Veteran's Administration use MAGI or AGI when determining income?

 

I am contemplating stopping work this year (62 1/2).  I have plenty of funds and passive income between my Traditional IRA, ROTH IRA and regular brokerage account.  My only real concern is proper medical.  I am a US veteran, 10 years in USAF.  No service disabilities, no purple heart or anything like that, so under current VA rules I at best would be classified as a group 7 or group 8 priority.  Either is fine.  The copays are fine until I turn 65 and jump to medicare.    I have a few options: 1: COBRA from work but that would be a bit pricey, 2: Obamacare if I keep my income low, 3: VA medical, but again that has income limits even heading overseas, and 4: getting medical in say Thailand, hanging there or overseas until 65 and medicare age.  Just options for discussions.

 

  Currently in order to even apply for VA medical, one has to have less than $47,000 in income (Florida).  What I can't find after a lot of searching is exactly what income the VA uses.  I am aware of Obamacare and Social Security Administration (medicare B premium income determination) and they use MAGI which is the sum of your AGI, and then any tax exempt interest.    I really have scoured the internet and the VA sites and just can't find anything in writing.

 

  Any USA Expats with VA experience out there that can shed some light?  My guess is the VA will use MAGI, similar to what Obamacare and also what the Social Security Administration uses when calculating income for things.

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This is probably obvious, but for the VA, the 10-10EZ instructions list ...Section V - Previous Calendar Year Gross Annual Income of Veteran, Spouse and Dependent Children.Report:

Gross annual income from employment, except for income from your farm, ranch, property or business. Include your wages, bonuses, tips, severance pay and other accrued benefits and your child's income information if it could have been used to pay your household expenses.

Net income from your farm, ranch, property, or business.

Other income amounts, including retirement and pension income, Social Security Retirement and Social Security Disability income, compensation benefits such as VA disability, unemployment, Workers and black lung, cash gifts, interest and dividends, including tax exempt earnings and distributions from Individual Retirement Accounts (IRAs) or annuities.

 

If you are controlling the distributions from you IRAs and regular brokerage - and don't have employment income, it would seem to me you could make your under $47K target. 

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6 hours ago, La Migra said:

This is probably obvious, but for the VA, the 10-10EZ instructions list ...Section V - Previous Calendar Year Gross Annual Income of Veteran, Spouse and Dependent Children.Report:

Gross annual income from employment, except for income from your farm, ranch, property or business. Include your wages, bonuses, tips, severance pay and other accrued benefits and your child's income information if it could have been used to pay your household expenses.

Net income from your farm, ranch, property, or business.

Other income amounts, including retirement and pension income, Social Security Retirement and Social Security Disability income, compensation benefits such as VA disability, unemployment, Workers and black lung, cash gifts, interest and dividends, including tax exempt earnings and distributions from Individual Retirement Accounts (IRAs) or annuities.

 

If you are controlling the distributions from you IRAs and regular brokerage - and don't have employment income, it would seem to me you could make your under $47K target. 

I looked and looked but did not see that part about tax exempt stuff on the EZ instructions.  Thanks for confirming that.  So they use basically the MAGI, as I suspected.  But of course those instructions say IRAs, which arguably is ambiguous because it would be highly unlikely they count ROTH IRA distributions which generally are not counted anywhere, even by Obamacare and SSA.

 

And yes I have complete control over my IRA distributions/conversions as I will slowly be converting monies in my Traditional IRA over to my ROTH IRA to avoid the Required Minimum Distribution <deleted> when I get towards 70 years old.  I have about 400k USD in my Traditional IRA at the moment so my plan is to convert some of that each year to my ROTH.  Those conversions are taxable events but I can control how much I do every year.  The ROTH IRA distributions never count for anything.   As far as my regular brokerage account, well, the ATT stock and my Tax Exempt funds (PRTAX and NEA) will be paying what they pay whether I take distributions out of that account or not. So the only way to control or reduce that income is to sell some off.  And today I did just sell my last individual Tax Free Muni bond worth about $20,000 to free up some more initial cash as I really am on the other side of the fence and ready to leave this job.  

 

  Starting in 2005 right after I got back from my first Thailand trip, I steered my investment portfolio towards simple brute force but tax free investments.  That worked out well. Unfortunately as I learned about Obamacare and SSA and what incomes they use, my income plan got moderated a bit.  But for years I dodged a lot of Federal and State income tax from my regular brokerage account tax free investments.  Now, looking into the near future and how to massage things

 

thanks for the info

Edited by gk10002000

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