Need MAGI reduction because of IRMAA

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Just completed preliminary look at 2016 numbers.  My MAGI just barely exceeds one of the IRMAA thresholds by X dollars.  Because of this I will have to pay 10X extra dollars in IRMAA surcharges.  This rather hurts.  I wish these surcharges were on a sliding scale but they are not.

Anyway, the question:

Has anyone ever solved this by retroactively reducing prior-year income?  I'm thinking in terms of retroactively declining or refusing income already received.  The money would be returned, obviously, only request to payer being revision and reissue of income report to IRS.  Of course any other method would get the job done too.

I cannot be the only one to have been ensnared by this trap.  Has anyone ever found a way out of this dilemma?  Would be most grateful for any suggestions or help, especially if you did a retroactive reduction successfully.  Please share how you did it.

   

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X=?

I have faced this issue many times myself.
You can't change already issued 1099s from last year unless they were made in error.

That is why I always do an extra large IRA to Roth conversion before December 31 so that I can dial-back retroactively some of that conversion (recharacterize) to go to the very top of the new IRMAA bracket while avoiding any new other tax brackets like the Medicare Investment tax surcharge, etc.

I know that doesn't lower your MAGI but it takes maximum advantage of the extra IRMA tax that you must pay.

Unfortunately, it is too late for you to use my suggested strategy for last year's taxes.

shinobi1 said:   Please share how you did it.

Traditional IRA contribution.

However, when you're close to a threshold, you need to do your pretax calculations in December because you have more choices like selling a security at a loss or cashing out a CD and taking an early withdrawal penalty.  

An early CD withdrawal penalty doesn't lower your MAGI number!

sloppy1 said:   An early CD withdrawal penalty doesn't lower your MAGI number!
  why not?   It reduces AGI.  

sloppy1 said:   An early CD withdrawal penalty doesn't lower your MAGI number!
  
I think you're wrong on this one, but from my reading, the traditional IRA is out.

The entry for a CD early withdrawal penalty deduction comes after the MAGI number has already been calculated and therefore doesn't effect the MAGI.
The MAGI is far different than the AGI.

sloppy1 said:   The entry for a CD early withdrawal penalty deduction comes after the MAGI number has already been calculated and therefore doesn't effect the MAGI.
The MAGI is far different than the AGI.


The MAGI isn't calculated on the 1040 form. It starts with AGI, and then they add back in various items. Early withdrawal penalty is NOT on the list, but IRAs are.
  

Chyvan said:   
sloppy1 said:   The entry for a CD early withdrawal penalty deduction comes after the MAGI number has already been calculated and therefore doesn't effect the MAGI.
The MAGI is far different than the AGI.


The MAGI isn't calculated on the 1040 form. It starts with AGI, and then they add back in various items. Early withdrawal penalty is NOT on the list, but IRAs are.
  

  There are a multitude of MAGIs, the most common of which is the one for IRAs.   OP's concern is w/ the IRMAA Medicare MAGI........

"To determine if you’ll pay higher premiums, Social Security uses the most recent federal tax return the IRS provides to us. If you must pay higher premiums, we use a sliding scale to make the adjustments, based on your modified adjusted gross income (MAGI). Your MAGI is your total adjusted gross income and tax-exempt interest income."        https://www.ssa.gov/pubs/EN-05-10536.pdf

So this MAGI is basically AGI w/ an adder.   Lowering AGI with CD EWP should lower this MAGI (and most other MAGIs AFAIK).

Guys, thanks.  I posted my question more out of unbridled frustration than anything else.  I realize there almost surely is no escape for me.

For whatever help it might be to others:

Probably around middle of last November (or whatever), with a very time consuming and (even after that) uncertain financial analysis, I might have been able to head this off.  I didn't put in that effort and now I must pay the price for my sloth.  Candidly, even back then my 2016 income remained too unpredictable for any estimate to be of much use.  I would have needed to jettison so much income, just to play safe and be sure, that it might not have paid me.

Struggling to find a silver lining, I have this observation:

In 2017 I can have a WHALE of a lot more income and not owe a dime more due to the IRMAA.  Oh goody goody.



 



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