Realized capital gains from a stock sale count as income two years later, triggering Medicare IRMAA surcharges long after the money is spent.
Joint filers crossing $218,000 in MAGI face Part B surcharges up to $487 monthly per person, hitting both spouses for the full calendar year.
Gifting appreciated shares directly to a grandchild shifts gains to their return at potentially 0% capital gains tax, protecting the grandparent's MAGI entirely.
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A 72-year-old retiree in Ohio posted a familiar story to a personal finance forum this spring: he had sold long-held stock in 2024 to write a $60,000 tuition check for his grandson's freshman year. Two years later, his Medicare premium notice arrived with an unexpected surcharge, and he wanted to know if the Social Security Administration had made a mistake. It had not.
A realized capital gain counts as income on the tax return, that return feeds modified adjusted gross income (MAGI), and MAGI from two years back sets the current year's Medicare Part B and Part D surcharges. The check went to the university. The IRS recorded the gain. Medicare read it as income.
The income-related monthly adjustment amount, or IRMAA, touches roughly 8% of people with Medicare Part B. A retiree whose combined income (Social Security, pensions, RMDs, interest, dividends, and realized gains) stays under the first threshold pays the standard premium. The trap opens once a one-time sale stacks on top of ordinary retirement income and pushes total MAGI past the first tier.
For 2026, that first tier begins at MAGI greater than $109,000 for individual filers and greater than $218,000 for joint filers. The standard Part B premium is $202.90 per month.
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The Social Security Administration uses the tax return from two years prior to set the current year's IRMAA. Sell stock in 2024, and it shows up on 2026 premiums. Sell stock in 2026, and it lands on the 2028 notice. By the time the letter arrives, the money is long gone, spent on tuition, a roof, or a wedding.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
