Hi-
 
My question is for the purpose of calculating income for health care. The health insurance company I had last year went south and I have to choose a new one. The new monthly premium would be about twice what I was paying and that would be a significant burden (i.e. I can't afford it.)
 
I don’t understand why rental income is included in gross income without the ability to deduct expenses. I have a small monthly rental income, but I also have to pay a monthly maintenance fee on that, plus property taxes and repairs. This past year, my rental income after taxes and repairs amounted to almost nothing.
 
I'm self-employed and as a small business owner I’m able to deduct business expenses, so why can’t I deduct rental income expenses as well for the same purpose? See https://www.healthcare.gov/income-and-household-information/income/
No deduction allowed for rental income.
 
I know that there are plenty of startup businesses that report loss of income in the first few or several years, but since the health care premium depends on gross income, how can they afford to pay it?
 
Thanks for letting me unburden myself and for any insights-
 
Susan

Don't move to Canada. It's worse here. Free health care is a myth and I have to spend $500+ on meds every month. I can get diagnosed for free, I can get surgery for free, but drugs have no free ride. My employer of 30 years just cancelled my drugs, dental, vision and life insurance. In another month they will try and cancel my pension.
 
Good luck with your insurance, I can't get any because of my health.

It's just a way to raise your income bracket. You can at least deduct expenses for taxes. It's not fair that's for sure. 
My company's health insurance went up 40% starting 2016 even after signing up for a much higher deductible plan. 
It's "bad all over"...

Actually, I believe the MAGI is based on your Adjusted Gross Income. Normally the contribution to the AGI from rental activity is going to be figured on the gross income from rents and other rental income minus the allowable deductions in the tax year which are adjustments to income. So the AGI only includes the actual (net) income from your rental activity. If you follow through your last year tax forms, you should have taken the deductions from rental expenses that were allowable last year and those deductions should have been subtracted from the total that showed up in the AGI. What they are saying in the usual discussion of income included in the MAGI is that you have to include rental income (receipts minus allowable expenses) not gross receipts from rental activity. 
 
The reason the MAGI is modified is that for certain purposes some income that generally does not show up in AGI is required to be included in MAGI and some deductions/adjustments that are included in the AGI are not allowed in the MAGI and must be added back. If your rental activity actually produces a net loss, you might not be able to use that loss to reduce the MAGI as you can the AGI (depends on whether the activity is "passive") so if the AGI includes a rental loss, then you might have to add back into the AGI the amount that was deducted as a loss (receipts - expenses < 0) as part of calculating the MAGI. 
 
http://www.irs.com/articl...-adjusted-gross-income

Hi,
 
Please note I have not been 100% up to date on this stuff for 10 years now!
 

Susan G ... My question is for the purpose of calculating income for health care. The health insurance company I had last year went south and I have to choose a new one. The new monthly premium would be about twice what I was paying and that would be a significant burden (i.e. I can't afford it.) I don’t understand why rental income is included in gross income without the ability to deduct expenses.

 
"Rental income", from other properties IS income. But it would be a part of the calculations for the depreciation and other factors relative to that property. It would not be bunched up with everything else.
 
Your own expenses on your house, go on Sch A, usually, for example.
 

Susan G ... I have a small monthly rental income, but I also have to pay a monthly maintenance fee on that, plus property taxes and repairs. This past year, my rental income after taxes and repairs amounted to almost nothing.

 
Depends on how this is setup. If you have a Sch C, and this is a part of it, then this rental income is a part of the depreciation process for the unit, if it applies. If you don't, adding this to the Sch A and other expenses, is probably going to be tough and not as good, I don't think.
 

Susan G  ...
I'm self-employed and as a small business owner I’m able to deduct business expenses, so why can’t I deduct rental income expenses as well for the same purpose? ...

 
During the time of doing psychic shows and the art stuff I was involved with, I used a Schedule C for it all. And you use every single nickel and receipt. You can NOT use that rental income as a part of that "business" unless it was designated as your own work space, for example, and even then the rules on that are very tough because of massive loop holes.  All expenses DIRECTLY related to the business would go to the Sch C.
 
Rental income, would not be a part of your business, unless you are in the rental business. We know you are in the music business, so you would not be able to add that rental income to your "business" as a musician. But you may setup a SECOND Sch C, and that information would go there, but I'm not sure it qualifies as a business, and rules here are also tough.
 
Thus, any "rental income", would, likely, be added to the amounts coming in to your hands, for the calculations on health care.
 
Susan, it may be expensive, but please, talk to a REAL accountant. You will never regret it. You need to know and understand this better so you know how to handle it. You won't if you don't learn this from a real accountant, and I do not mean a book keeper. This will cost you a bit at first, but in the end, you gain, because you learn to channel the energy and information into the right place for proper accounting.

Yep an accountant is worth their weight in gold when dealing with anything tax related. I tried to get by without one for a few years and ended up with thousands of dollars in fines from not filing payroll taxes correctly. Whatever your problem, an accountant can give you peace of mind and potentially save you a lot of money. 
 
I'm not sure that you can't deduct rental income expenses though. Under the heading "See what's included in MAGI" it says "Your Adjusted Gross Income (AGI) on your federal tax return." Your AGI includes net rental income, not gross. 
 
 
 
 

I'd love to have ANY gross income at the moment (I'd even settle for some plain and homely income)... 

...but they said it would all be so much better and cheaper.

clintmartin
...but they said it would all be so much better and cheaper.

They meant for them not us

Mosvalve

clintmartin
...but they said it would all be so much better and cheaper.

They meant for them not us

I disagree. Having helped mom in her office with many returns for many years, the one thing I will say is ... how STUPID many people are, instead of smart with their money. It's not about a "financial" this or that, or anything ... it's about someone that knows the TAX LAW, and has to take exams YEARLY to stay up on these things, so they can do their work properly.
 
Cheaper and supposedly better is a joke in the money business! It translates to ... you're a loser! And NONE of us want that!