At some point in the Marketplace and Medicaid applications, you get asked if you pay alimony, student loan interest, or "other" deductions. Just what are those "other deductions?" If you have them, you can essentially lower the income that is counted as MAGI, or Modified Adjusted Gross Income.
The way that works is, if you have income of $20,000 and you pay $300 in student loan interest, your "counted" annual income is only $19,700. If you also paid $2,000 into an IRA, your "counted" annual income becomes $17,700.
For the most part, the things that you would be able to deduct are things on the bottom half of the front page of your 1040 tax form.
Why "Other" can be a beautiful thing
Remember: the healthcare.gov enrollment application specifically asks you about alimony and student loan interest, but the "other" category may be both interesting and useful.
People who are self-employed, who are actively paying tuition, or who want to invest in retirement through an IRA or in a health savings account may find a path to higher tax credits and increased cost sharing with just a bit of attention to that "other" category.
If you need tax advice about what is deductible, contact your accountant or talk to a tax preparer. We can answer questions or give advice about general tax filing but are not accounts. If you are low income, contact the United Way and ask about their VITA tax program or check out their free online tax help at MyFreeTaxes.
As always, if you have questions, leave us a comment or give us a call at (734) 544-3030. We Help People--LIKE YOU!