Just when I thought I had come across most of the potential challenges with this form!
Client had a heavily subsidized covered California health plan. Problem was his wife went back to work in 2014 and they did not notify the exchange. First crack at the return shows they owe about 12k. While reviewing the return I noticed that the 1095A shows that his son was also covered under the plan. Son went back to work in 2014 and is filing on his own.
I get excited and figure I can allocate 1/3 of the subsidy and cost to the kid and save some good money. In researching the situation, the directions say "You and the taxpayer claiming the personal exemption may agree on any allocation percentage between zero and one hundred percent..."
This seems like a loophole to drive the truck through! Can we really do this? If the entire 1095A is reported on the kid's return there will be a tax savings of about 13K.
I don't like when this happens. I know it is not "fair" or correct to do it this way but it seems like this was another unintended consequence of how the law was put together. But my job is to get the best, legal outcome for my clients.
Thoughts?