Help with Calculating your Modified Adjusted Gross Income


We’ve been getting a lot of questions about the income portion of the new health insurance application process.   Calculating your modified adjusted gross income does not have to be a difficult process.  For many it is simply their gross wages before taxes.  Often you’ll have all the information you need on your 2012 tax return and a current bank statement.

Keep in mind tax credits are based upon your future estimated Modified Adjusted Gross Income for 2014. 

Here’s a list of the items you need to include[1]:

  • Wages
  • Salary
  • Tips
  • Self-employment income (business income minus expenses and self employment taxes)
  • Rental income (minus expenses)
  • Social Security payments (including Social Security disability payments*)
  • Alimony
  • Unemployment
  • Dividends, Capital Gains
  • Pension income

What not to include:

  • Child Support
  • Gifts
  • Supplemental Security Income*
  • Veterns' Disability Payments
  • Workers' Compensation
  • Proceeds from loans (e.g. student loans, personal bank loans, home equity loans)


*It is key to distinguish the differences between Social Security Payments, Social Security Disability Insurance and Supplemental Income Payments, which are all administered by the Social Security Administration.

Social Security expenditures provide income designed to keep Americans over age 65 above the Federal Poverty Level.  When you work and pay social security taxes, you earn “credits” toward your Social Security benefits.[2]  Your benefit payments are a direct result of how much you earned during your working career.  Higher lifetime earners will receive larger benefits.  Currently 96% of American workers are covered under Social Security.

Social Security Disability Insurance (SSDI or SSD) provides supplemental income to folks who are restricted physically of employment as a result of a disability.  These payments can be administered on a permanent or temporary basis, depending on the disability.

Supplemental Security Income (SSI) provides stipends to people who are low income and are either aged (65 or older), blind or disabled.   There are currently 8 million Americans receiving SSI.  The key distinction between SSI and SSD is that there is an income restriction for SSI.  Most SSI recipients are below an administratively-mandated income threshold, and indeed these individuals must in fact stay below that threshold to continue receiving SSI; but this is not the case with SSD.[3]  For this reason, SSI is omitted from inclusion when calculating your Modified Adjusted Gross Income.

As always, please don’t hesitate to call our office, 360-464-1622, for additional information on calculating your modified adjusted gross income.  Another great resource is the following link:

IMPORTANT:  We are not accountants or tax professionals and the above information should not be considered tax advice.  The information above has been compiled from reliable sources (IRS, UC Berkeley Labor Center, etc) and shared with our clients as a courtesy.  Always confirm and verify information with your CPA or tax professional as it relates to your situation.

[1] (October 29, 2013)