ACA penalty and non-resident spouse

Forum|Forum|6 years ago
September 17, 2019
2 replies
23 views

Hi,

I am a US resident for tax-filing purposes, whereas my spouse who entered US on 09/12/2018, is a non-resident alien, as she does not satisfy the substantial presence test. As per the IRS website, we can file a "Married filing jointly" tax return by making the choice to treat my spouse as a resident for the entire year.

I had ACA-mandated full healthcare coverage through my employer for all of 2018, however, my spouse was not covered from September to December 2018, as she did not qualify for coverage either through my employer or through the ACA marketplace.

I am now confused as to whether we are liable to pay the ACA penalty by electing to treat my spouse as a resident alien and filing a joint return. Do we have to pay the penalty? If not, can I file Form 8965 to claim non-resident coverage exemption for my spouse while still treating her as a resident and filing jointly?

I would greatly appreciate if anyone could provide guidance. Thank you very much for your patience and help.

Anonymous

see this link

https://www.healthcare.gov/exemptions-tool/#/results/2018/details/resident-alien

https://www.irs.gov/pub/irs-pdf/p519.pdf

defines what criteria need to be met to be a resident alien

akp1Author

Level 2

Thank you very much for the response.

We have already determined that my spouse can choose to be treated as a resident alien. However, the question is whether we have to pay the ACA penalty? From the healthcare.gov website, we may qualify for a health coverage exemption if:

You’re a resident alien who both:

Was a citizen or national of a foreign country with which the U.S. has an income tax treaty with a nondiscrimination clause including (1) a dual-state alien in the first year of U.S. residence or (2) a nonresident alien or dual-status who elects to file a joint return with a U.S. spouse, AND
Was a bona fide resident of a foreign country for the tax year

However, my spouse has been residing in US since 09/12/2018 on a non-immigrant visa. The "Bona fide residence test" requires residency in the foreign country for the entire tax year (Jan - Dec). Does this mean that we cannot claim the healthcare coverage exemption and have to pay the penalty for the entire year? If so, it doesn't make any sense since we did not even qualify to purchase the coverage even if we wanted to.

I really appreciate your help in guiding me with this.