Estimating income can be tricky
Estimating your income in advance can be tough for freelancers and people who are self-employed, since we know income can vary quite a bit. Here are some tips for calculating your expected annual income.
1. Start with your monthly income
If you don't receive an annual salary, enter the amount you typically earn in a month, and multiply by 12. Make sure the total looks about right, since many people earn more in one season and less in others.
2. Use your 2024 income as a starting point
If you don't know exactly what you'll earn next year, that's okay. If you expect to earn about what you earned in 2024, use your 2024 income. As things change throughout the year, you'll be able to update your income here.
3. Report changes
If you start earning more or less than you expected, be sure to update your information in your Catch account. If your are applying on a state based exchange, you will be able to update your income there. Keeping your information current will ensure the savings you're eligible for are up-to-date. Catch makes the process easy, which helps you save on your coverage or avoid a surprise tax bill down the road.
4. Don't forget about expenses and deductions
If you’re self-employed, you can deduct the same expenses you’d deduct from your taxes. If not, you can still deduct expenses like alimony, student loan interest or IRA contributions.
What counts as income?
Anything you earn from work, including W2, self-employed or 1099 work can count towards your income. Unemployment and income from other members of your household (including those not applying for coverage) should also be counted.
Whose income should I include?
For most people, a household consists of the tax filer, their spouse if they have one, and their tax dependents. Make sure you include all your household members, even those who aren't applying for coverage -- their income still counts!
Why is income important?
The marketplace uses your income estimate and household information to determine what plans and savings you qualify for.
When you file your taxes, the IRS will look at what you actually earned to figure out what your health insurance premiums should have been. If your income is lower than you estimated, you’ll get a refund. If your income is higher than you estimated, you’ll owe a bit more in taxes.
As a head’s up, if your estimated income looks very different from last year’s income, you may be asked to provide proof.