Let's assume for this discussion that the Affordable Care Act [ACA] will remain and go into effect as scheduled.
Since, under the ACA, some people will be eligible to get health insurance through Health Insurance Exchanges beginning in January 2014, and since initial eligibility for any Tax Credits associated with this insurance will be determined from MAGI's "based on the prior year's tax return", which, in January
2014 would be the return filed in 2013 for the tax year 2012, [available to Exchanges through HHS, who will get the info directly from the IRS], does this have implications for tax planning for 2012 income for tax returns filed in 2013?For example, my spouse and I live on a relatively low fixed income. Late each year I calculate how much I can convert from my IRA to my Roth IRA (a taxable event) such that my final Federal tax bill will be small (or $0). However, since the ACA credits will a graduated percentage based upon the MAGI compared to Federal Poverty Level [FPL] (from 0% to 400%, the latter of which, for a family of 2 in 2012, is $60,528 for the lower 48 states), I would be able to manipulate my MAGI as a percentage of the FPL a fair amount by changing the amount of the Roth conversion, thereby affecting the initial eligibility for tax credits for 2014.
[Yes, I do realize that FINAL eligibility determinations will be done retrospectively based on the year in question's tax return, which for 2014 would be filed in 2015 - and any increased credit or decreased credit would be calculated and refunded/assessed then.]Am I over-thinking this?