Tuesday, June 21, 2011

High-Income Filers and the COBRA Subsidy

Do you remember the COBRA assistance payments available to workers laid-off between September, 2008 and May, 2010? The IRS is sending letters to remind them that some of the subsidy could be taxable.

The recapture is income-based. If the taxpayer is single, then recapture begins at $125,000 and phases-out at $145,000. For marrieds the range is $250,000 to $290,000. Income is defined as “Modified AGI,” which for most people will be AGI plus tax-exempt interest.

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