If your total income is below a certain limit, long-term capital gains are taxed with 0% (again, up to a certain limit).
If you stay below both limits, you are paying zero tax for the year; but - according to my reading of the ACA rules - the long-term capital gains are still considered for the subsidy limits. Correct?
[I understand this is partly answered in other more complex questions about related topics, but not very clear; I wanted to make this a simple and standalone question/answer].
TLDR: LTCG are counted, but neither side of the comparison is quite as you described
If your total income is below a certain limit, long-term capital gains are taxed with 0% (again, up to a certain limit).
Not quite. If your taxable income is less than the top end of the 12% bracket (for 2019 $39,475 for single or MFS, $52,850 for HoH, $78,950 for MFJ or widow(er)) then any net longterm capital gains (realized and thus reported, as noted in comments), and also any 'qualified' dividends, within that amount are taxed at 0%. If your taxable income is above that limit, but your taxable-at-ordinary-rate income is less, then the portion of LTCG+QD that 'fits' between the end of your ordinary-rate income minus deductions (next) and the end of the 12% bracket is taxed at 0%, and the portion that 'fits' in the next several brackets is taxed at 15% instead of the normal bracket rates from 22% to 32%. Unless you are subject to the Alternative Minimum Tax, which may change all of this. Plus if your AGI (further adjusted in some cases) exceeds a significantly higher threshold ($200k single or HoH, $125k MFS, $250k MFJ or widow(er)) then all types of 'investment' income within that excess -- both long and short cap gains, qualified and unqualified dividends, interest and more -- is subject to a 3.8% surtax, the Net Investment Income Tax, also due to PPACA.
Taxable income is what the tax return calls 'total income' -- which isn't really total as it already excludes some items, like 'muni' bond interest (see below) -- minus a number of deductions which can be substantial depending on your situation. This is computed in two stages; first you subtract some deductions that are categorized as 'adjustments', giving your 'adjusted gross income' (AGI, see below), then you subtract either the standard deduction for your filing status or a different set of 'itemized' deductions, at your choice. (One exception: if a married couple files separately, either both or neither must itemize. But if you file separately you usually can't get PPACA subsidy at all.)
OTOH eligibility for (and the amount of) the PPACA subsidy, formally the Premium Tax Credit, is based on your household modified AGI (MAGI) compared to 100% to 400% of the Federal Poverty Level (FPL): this figure adds the MAGI of any dependents who file their own tax returns, uses AGI which has had some deductions subtracted (but does include the cap gains you ask about), and adds some items that are not included even in 'total income' for income tax purposes, specifically:
interest on tax-exempt bonds, traditionally called 'municipals' or 'munis' for short, even though almost none are issued by cities nowadays
foreign earned income that you excluded on form 2555 (which only applies if you worked and lived in a foreign country at least most of the year -- and PPACA subsidy is only for coverage purchased on the 'marketplace' which only allows (legal!) US residents)
the nontaxable portion of Social Security benefits (which for people in households below 400% FPL will often be most or all of them -- but most Social Security recipients are old enough for Medicare, which automatically counts as 'minimum essential coverage', making them ineligible for PPACA subsidy)
See the instructions for form 8962 line 2a and 2b (also available in PDF, along with the form, here).
(I needed to learn about this because I'm in possibly the same situation as you: during enrollment before the beginning of the year I projected I would be eligible, and requested APTC accordingly, but I ended up ineligible due to cap gains and will have to pay it back. Although since my prior year liability was zero, I can delay payment until April without penalty, FWIW.) (update: due to COVID the repayment was further delayed until July. Not that it makes much difference.)
This is an interesting question, and one that I am going to have to deal with.
I am basically someone with large assets but low income, and so I qualify for the Medicaid expansion, which only looks at income. There will be some year in the future when I will be selling a position in a stock/ETF/fund to realize a hefty long-term capital gain. The question is how will this affect my Medicaid eligibility.
I think I have found a solution that will work. As it turns out, my Medicaid coverage cycles in APR, with MAR being when I can apply for the next 12 months (it is a hokey month and not JAN because my state first expanded Medicaid in an APR). However, there is a beauty to this situation as MAR is a month where it is possible to file one's taxes so as to have it on the books in MAR (i.e., file it in January), or on the books as late as OCT 15 (i.e., via a filing extension, especially is one is abroad from AUG 15 to OCT 15, although anyone could always go to AUG 15).
So let's say that 2025 is a big capital gains year. Then the filing for that year should be done on OCT 15, 2026, which would mean that for the application in MAR 2026 would use the 2025 tax form. Then the taxes for 2026 would be filed in JAN 2027, and so the application in MAR 2027 would use the 2027 tax form. :)
