How to Determine Your ACA Income if You’re Self-Employed
If you’re self-employed, determining your income for the purposes of the Affordable Care Act (ACA) can be a bit tricky. That’s because the ACA uses a different definition of income than the IRS.
For the IRS, your income is your gross income minus certain deductions and expenses. However, for the ACA, your income is your net income, which is your gross income minus all of your business expenses.
This can make a big difference in your ACA eligibility and premium. For example, if you’re a rideshare driver, your gross income will include all of the fares you earn. However, your net income will be much lower after you deduct your expenses, such as gas, maintenance, and depreciation.
What Expenses Can I Deduct?
You can deduct any ordinary and necessary business expenses from your gross income. This includes expenses such as:
Advertising
Car and truck expenses
Depreciation
Gas, oil, and repairs
Insurance
Interest
Legal and professional fees
Office expenses
Rent
Supplies
Travel
Wages
How Do I Report My Income?
When you apply for ACA health insurance, you’ll need to report your net income. You can do this by using your Schedule SE (Form 1040), which is the form you use to report your self-employment income to the IRS.
What If My Net Income Is Negative?
If your net income is negative, you can report it as a loss. This will reduce your ACA income and may make you eligible for premium subsidies.
How Can I Get Help?
If you need help determining your ACA income, you can contact a licensed agent. They can help you understand the rules and make sure that you’re reporting your income correctly.
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