Form 1095-A with a Unclaimed Qualifing Child

[taxpayer122]

My wife and I have ACA insurance.  Our policy also contains our 22 year old son who is a full time college student.  We pay the premium for our son.  At the time the ACA application was completed we assumed that we would claim our son as a tax dependent and included him on our policy. We do not receive a APTC  and as such columns B and C in Part III of the 1095-A are blank. 

As it turned out, our son's summer internship included paid living expenses which were included in Box 1 of his W-2.  The amount of paid living expenses are substantial.  If we claim him as dependent and include his MAGI on our 8962, our PTC refund will be significantly reduced from what it would have been if had not received company paid housing.  

Therefore, I have the following questions:

1) Is it permissible to not include our son as a dependent on our taxes and have him indicate on his taxes that he qualifies as a dependent on someone else's taxes but is not being claimed?  It is my understanding that this would allow us to exclude his MAGI from our 8962. 

2) include the premium we paid on his behalf in our 1095-A Part III, Column B (SLCSP).

3) answer "no" to the question on our TT interview that asks if we share this policy with someone who is not on our taxes.  It is my understanding that answering "yes" to this question would allow me to allocate a portion of the paid premiums to my son so he could claim a PTC on his tax return.  In my case, i do not want this since a) i paid my son's premium and b) my son would not eligible to receive the PTC anyway since he could be claimed as a dependent my return.

The approach maximizes both our and my son's tax refunds, but is it kosher?

Thank you.

[MarilynG1]

Your situation is not unique.  Balancing out income at tax time with what was 'estimated' to the Marketplace can leave taxpayers owing.  However, there is a 'maximum' repayment limitation amount calculation for just such situations. 

If your son earned enough income to be required to file a tax return, for purposes of the premium tax credit, your household income is your modified adjusted gross income for the year, plus that of every other member of your family who is required to file a federal income tax return.  So not including him as a dependent won't help with calculating household MAGI.

Don't add or remove any numbers to the columns on Form 1095-A.  There's a good chance your Efile will Reject if you do so.  The 1095-A already reflects the premiums you paid (whether it was for your son, yourselves, or all of you).  

Look at Part III, column B of your 1095-A, titled “Monthly second lowest cost silver plan (SLCSP) premium.” It should show figures for each month any household member had the Marketplace plan.  The SLCSP premium is incorrect if:

• Part III, Column B has a “0” or is blank for any month someone in your household had the Marketplace plan
• You had changes in your household that you didn’t tell the Marketplace about — like having a baby, moving, getting married or divorced, or losing a dependent

If either applies to you, use our tax tool to get the premium for your second lowest cost Silver plan.  You may need to get this straightened out first and get a revised 1095-A. 

The 'sharing with another person' option is to allocate Advance Premiums between you, but since you didn't receive them, this may not benefit you or your son, although you could test it with different % options. 

Here's more info on How is the Premium Tax Credit Calculated and Allocating a Marketplace Premium. 

@taxpayer122 

[AmeliesUncle]

First, double check if he actually qualifies as your dependent.  If the living expenses were that high, are you SURE he didn't pay for over half of his own support (the company paid expenses that ended up on his W-2 are considered as him paying it)?

1) Yes.  HOWEVER, you may be misunderstanding some things.  Although you would not include his income, there are TWO negative effects of that.  (1) your "family size" has now changed from three people to two people, which lowers the credit.  (2) The SLCSP (column B of the 1095-A) has now been lowered (which will lower your credit), so you need to look up the lower amount and enter that into the program.  Below is the link for the Federal Marketplace lookup.
https://www.healthcare.gov/tax-tool/#/

2) Yes.

3) Yes.