Tips and gratuities – should these be included on Marketplace applications?

Tips and gratuities – should these be included on Marketplace applications?

• A. No
• B. Yes, included on Marketplace applications
• C. Included only if reported on tax return
• D. Included only for dependents

Answer: (B)

Tips and gratuities are part of earned income, and the Marketplace uses your household income to determine eligibility for premium subsidies. When you fill out a Marketplace application, you report income in terms of MAGI, which includes wages and tips. Including tips ensures the income used to calculate subsidies is accurate, so tips should be included on the application. It's not correct to exclude tips or to require tax return filing as a condition for reporting them, because the Marketplace looks at current-year income to determine eligibility, and you should estimate and report earned tips for the year even if you haven’t filed a tax return yet. Income isn’t limited to dependents; it belongs to the entire household.

Tips and gratuities are part of earned income, and the Marketplace uses your household income to determine eligibility for premium subsidies. When you fill out a Marketplace application, you report income in terms of MAGI, which includes wages and tips. Including tips ensures the income used to calculate subsidies is accurate, so tips should be included on the application.

It's not correct to exclude tips or to require tax return filing as a condition for reporting them, because the Marketplace looks at current-year income to determine eligibility, and you should estimate and report earned tips for the year even if you haven’t filed a tax return yet. Income isn’t limited to dependents; it belongs to the entire household.