How to estimate self-employment income for your ACA subsidy

The Marketplace asks one deceptively simple question: what will your household income be this year? For a freelancer, the honest answer is "it depends," which is not an accepted value. Here's how to produce a defensible number.

Which income counts

Your MAGI: net self-employment profit (revenue minus business expenses — the Schedule C bottom line, not your invoiced total), plus wages from any W-2 work, plus a spouse's income, plus most other income (interest, dividends, capital gains, unemployment benefits). Not counted: most gifts and, notably, the subsidy itself.

The build, step by step

1. Start with signed work. Contracted revenue you're confident of, minus real business expenses, gives your floor.
2. Add a sober estimate of pipeline work. Use last year's pattern if you have one; discount hope by half if you don't.
3. Subtract above-the-line deductions you'll actually take — half of self-employment tax, retirement contributions, HSA contributions, and the self-employed health insurance deduction.
4. Round up, not down. Underestimating income overstates your subsidy, and with the repayment caps eliminated starting plan year 2026, the full overage comes due at tax time. Overestimating just means a refund-side correction in your favor.

Then maintain it — this is the part people skip

Your estimate is not a set-and-forget. Land a big client in June? Report it that month; your subsidy adjusts prospectively instead of clawing back retroactively. Lose your anchor client? Report that too — your subsidy goes up now, when you need it, rather than as a lump next April. Updating takes minutes through your enrollment account.

A worked example

[PLACEHOLDER — during licensed review, insert a full worked example for plan year 2027: a designer with $78,000 gross, $16,000 expenses, quarterly variance, showing MAGI, the resulting subsidy at a representative FL ZIP, and the reconciliation if actuals land 15% high.]