8850 / What is “household income” and how does it determine whether an individual is eligible for a premium assistance tax credit?

Household income is a taxpayer’s modified adjusted gross income (MAGI, see below) plus the aggregate modified adjusted gross income of any other individual who was both (1) taken into account in determining the taxpayer’s family size for purposes of determining qualification for the credit and (2) required to file a federal tax return for the tax year in question.¹ Because the taxpayer’s family size is determined by counting any individual whom the taxpayer was entitled to claim as a dependent for the tax year,² it is essentially the case that any income of the taxpayer’s dependents who are required to file a return for the year is included in calculating the taxpayer’s MAGI.

A taxpayer’s MAGI is the adjusted gross income shown on the taxpayer’s federal income tax return for the year plus any excluded foreign income, nontaxable Social Security benefits and tax-exempt interest accrued or received during the tax year.³ Supplemental Social Security income is not included in a taxpayer’s MAGI.⁴

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1. IRC § 36B(d)(2).

2. IRC § 36B(d)(1).

3. IRC § 36B(d)(2)(B).