Premium Tax Credit

EZTAX, Please re-re-confirm that they are allowed to put 100% of the 1095-A on the 25 23 year old daughter's tax return that has $11,000 of wages on it. It feels SO wrong.

Wiles - I am not seeing the specifics of your case. All on the 1095A all year, kid makes to much to be claimed by parents?

Yes. Nondependent child was on the 1095A all year.

Yes. Child is age 25 23. Not in school. Makes $11,000 in wages.

Household in this case is folks on the tax return, not in the actual home (I believe) so if the parents cannot claim her as a dependent then their income is not part of her "household".

Right. Two different tax families.

We did prevail in the audit for what it is worth.

What are you talking about – a situation similar to Wiles’?

EZTAX, Please re-re-confirm that they are allowed to put 100% of the 1095-A on the 25 23 year old daughter's tax return that has $11,000 of wages on it. It feels SO wrong.

It might feel wrong, but it is entirely permissible. We’ve even debated whether or not you could do the 100% allocation to the kid, for all months during the year, when the kid was only on the policy for part of the year...

And be sure all parties file F8962.

Thank you, Jeff.

EZTAX, please share more about your audit.

2016 return. We prepared kids return and filed with no form 8962. Then parents came in (4/15 natch!) and dropped off their info. I saw that their Covered Cal was going to blow up on them so put them on extension and had them send in 20k to cover. Amended kids return claiming full amount of subsidy. IRS sent out letter at first not accepting it. We went back and forth a few times. Finally found someone familiar with situation who approved amended return. Filed parents return with no repayment of credit and kid got a refund from net premium credit. Scary, crazy, but we felt we had to do what we could. Did not charge nearly enough for the adventure!

Thank you for the info. And thank you for teaching me "natch!"

Different question - Could a married couple file separate in order to cut their household income in half? The poverty line for 2 is $16,460. For 1 it is $12,140.

Yes but I think you have to spilt 50/50. Also need to deal with community property split. Finally, I do not know if Covered Cal (or whatever state's plan) would react by not allowing a subsidy in the following year. Theoretically they should. If you know you are going to file MFS then no subsidy. Weird set up and I am not 100% sure of any of this.

Moral dilemma #2. So I moved 100% of the 1095-A to the nondependent daughter's tax return. The parents are no longer required to repay their PTC. But now the daughter is getting an additional $5,000 PTC on her return.

This is feeling so wrong. I just want to do some sort of override so that her Form 8962 zeroes out.

Any guidance? Do I need to swallow this and let them know the "good news". They were already sort of struggling with the idea that the daughter is reporting 100%. But they also did not want to have to repay any of the PTC.