Form 1095-A and allocation

[galume]

My wife and I our filling out the portion of our taxes which ask if we had health insurance through the market place and we did. We listed my son and daughter as dependents under are health insurance but my son whose 22 does files his own taxes and is not considered a dependent. We did get an advance premium credit, but my question is if we allocate 100 percent to my son and we claim 100 percent of the APC and he claims 0% we tried it out and our refund reduced to $80 and his rose from 1000 to 15000. This does not seem right but clearly the tax language says you can allocate any percentage, is this really legal or will my son be penalized in the future.

filed married jointly income- 68000

Sons single income is 12000

[ColeenD3]

Yes, you can allocate it however you choose. You can try multiple scenarios to see how it can benefit all concerned.

Please see this answer from ShawnaD

• If your parents did NOT tell the Healthcare Marketplace (usually when they applied for health insurance) that you were not going to be their dependent, you will NOT receive a 1095-A of your own.  

• • You will need to get a copy of your parents' 1095-A and enter it on your tax return.  On the screen after entering the 1095-A, you will check the box indicating that the policy was shared by somebody that is not on your tax return.  It will then prompt you with further questions to determine how much of it is "allocated" to you (even if it is 0%). Your parents would follow this same procedure.

• • If there was Advance credit received (column C of the 1095-A), your parents have the option to claim 100% of the 1095-A on their tax return, or to "allocate" part (or all) of it to you.  If you both agree, the allocation can be anywhere from 0% to 100%.  If you can not agree and Advance credit was received (column C on the 1095-A), then it is divided by the number of people on the insurance policy.  For example, if the insurance policy covers 4 people, each person is allocated 25%.

[AmeliesUncle]

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@galume wrote:

we allocate 100 percent to my son and we claim 100 percent of the APC and he claims 0%

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No, all percentages need to be the same.  So if you allocate 100% to him, he also claims 100% of the Advance credit.

It is legal, BUT you are also required to report changed to the Marketplace.  So you need to tell the Marketplace that he is no longer your dependent.  Then he will get his own 1095-A next year.

[VASSART]

HI. I have a similar question. Was originally planning to claim 22 yr old daughter as dependent since still supported her while at school. Then in June she received a fellowship, including ability for healthcare coverage, so I removed herfrom coverage after July - her policy started up in August.  Because she made 10k and I only sent her 6300 to support her expenses, I feel I canmot claim her as dependent. I want to allocate 100% of Jan to June to me, and 100% of July to my daughter. Q - Can I put the same ACA number in 2 different allocations (one for 1st 6 months and another for July), OR do I just split all 7 months 85%/15%?

[MarilynG1]

No, allocate 100% to yourself.  There is no way to split the 1095-A policy by months.  The household total annual income is used in calculating Form 8962 for the Premium Tax Credit. 

For a college student, the amount of their income doesn't matter.  What matters is if you provided over 50% of their support. You could probably claim her as a dependent (and her education expenses) on your return. 

If she files as a dependent, and she earned 10K, her Standard Deduction would be $10,450.  She would owe no tax and could get any tax she paid on her wages refunded. 

Here's more info on What does Financially Support Mean? and Did I Support Myself?

@VASSART