Blue Mass Group

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Connector still goofy to artists

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BostonNOW notes that the new health care law uses artists’ gross income as their eligibility for subsidized Commonwealth Care, not their net (i.e. minus expenses for supplies and whatnot). Someone named “Eric from the Connector’s staff” writes in to say this:

In response to the input we received from artists, we?ve made an important change to the final set of proposed regulations, which is scheduled for a vote of approval by the Connector Board today. This change would exempt artists whose adjusted gross income, net of legitimate business expenses, does not meet the affordability standards that we lay out.

Please note that these regulations will not affect the eligibility criteria for Commonwealth Care, the program that provides subsidized health insurance to eligible individuals. Gross income ? not adjusted gross income ? will continue to be used for the purposes of determining eligibility for participation in Commonwealth Care.

Look, that’s dumb. There’s no reason for the Connector to get a case of the stupids just because you’re talking about sole-proprietors here. Your actual degree of wealth is your net income clarification: adjusted gross income, not gross. Money that you spend running your business is money you don’t have to spend on your family, your rent, or your chemical dependency. No businesses or sole proprietors get taxed on their gross income.

This is not hard, folks.

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Comments

  1. Form an LLC, deduct expenses, pay yourself a salary.  LLCs are direct pass-through entities, taxed at the personal rate.  Many small businesses operate this way.

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    Why are artists receiving a special eligibility treatment?

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    Why not, say, seniors?  Or the left-handed?

    • simply operating as a sole proprietor and filing profit and loss forms for ones business activity would suffice. it’s not even necessary to distinguish their trade as ‘art’, rather than, say, plumbing or asphalt laying. the principles are the same. so this would be no special loophole for some chosen group. it’s just the nature of sole-proprietorship.

  2. I believe that “gross income” IS net of expenses.  This is what distinguishes it from gross revenue, which is what you have before you net those expenses out.

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    Once expenses are netted out, you have, in essence, profit.  Or gross income.

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    Net income is gross income after taxes are taken out.  Take home pay.  I agree that this is a better measure of ability to pay, because it accounts for, AHEM!, the tax burden.

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    It doesn’t make sense.  Maybe one of our tax experts will weigh in.

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    It does sound like a particular group getting special treatment.

      • “Eric” above refers to “adjusted gross income” — that is, net of expenses.

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        Uncle Sam sez/I emphasize:

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        AGI is defined as your taxable income from all sources including wages, salaries, tips, taxable interest, ordinary dividends, taxable refunds, credits, or offsets of state and local income taxes, alimony received, business income or loss, capital gains or losses, other gains or losses, taxable IRA distributions, taxable pensions and annuities, rental real estate, royalties, farm income or losses, unemployment compensation, taxable social security benefits, and other income minus specific deductions including educator expenses, the IRA deduction, student loan interest deduction, tuition and fees deduction, Archer MSA deduction, moving expenses, one-half of self-employment tax, self-employed health insurance deduction, self-employed SEP, SIMPLE, and qualified plans, penalty on early withdrawal of savings, and alimony paid by you.

    • is where i believe you slip off of the rails. what you’re referring to as profit in this case is net. not gross. and while a sole proprietor may not not have taxes taken out of their ‘take home pay’ (ie paycheck), they make up for that by sending a much larger check to the irs/dor at the end of the year. (or quarter, depending on how they’re set up)

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