Hello, during 2020 when I needed to set up medical insurance with the 'marketplace', I had no idea whether or not I was going to able to claim my two stepsons as dependents. I had no idea in early 2020 that they were not going to attend any classes. Since they attended no classes, my Wife and I cannot claim them as dependents. Yet, the marketplace wanted to know in early 2020 if we were going to claim them as dependents. Since I thought they were going to attend classes, I said yes. They did not attend classes. The marketplace did not know this and included both of them on the 1095-A. If they were not going to be dependents, I still would have to give their approximate income, and the marketplace would have sent them their own 1095-A. This did not happen, and again, they both appear on my Wife's and my1095 A.
This is not fair since I had no idea in early 2020 things would transpire this way. Now, it appears my Wife and I are expected to put their AGI income on our tax return. We may be financially penalized for not knowing what their correct 2020 AGI would be when it comes to the marketplace determining what premium credit we may received.
Even if I don't enter the stepsons' AGI income on form 8962, won't the IRS will be looking for their W2 information to see how it matches with our 1095-A? How can I resolve this without paying some kind of financial penalty?
Since we cannot claim either stepson in 2020 as a dependent, do I still have to enter their AGI on form 8962? Again, if I don't, won't the IRS be looking for some kind of reconciliation with their income and the projected income I gave on the marketplace application?
How can this be resolved?
Thanks
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Unfortunately, you may be stuck. The Marketplace expects that you will notify them of any changes in your household.
Are they filing their own returns? If so, you can divide all the amounts on your 1095-A between the 3 returns. You can allocate however you choose, as long as all three percentages amount to 100%.
Please see this information on how to determine your household for the PTC. PTC household
How does the marketplace establish household size to determine eligibility for the premium tax credit?
A person’s household for premium tax credit eligibility includes all the individuals on their tax return — the tax filer, the tax filer’s spouse (if married filing jointly), and any dependents. Everyone is included in the household, even family members who are not applying for coverage and those who are not eligible for a premium tax credit. For example:
Who can be in a household together?
The composition of the household for premium tax credit purposes follows Internal Revenue Service (IRS) rules for filing status and dependents. For more information on tax rules, see The Health Assister’s Guide to Tax Rules.
The actual premium tax credit for the year will differ from the advance credit amount estimated by the Marketplace if your family size or household income as estimated at the time of enrollment is different from the family size or household income you report on your return. The more your family size or household income differs from the Marketplace estimates used to compute your advance credit payments, the more significant the difference will be between your advance credit payments and your actual credit.
Notifying the Marketplace about changes in circumstances as soon as they occur will allow the Marketplace to update the information used to determine your expected amount of the premium tax credit and adjust your advance payment amount. This adjustment will decrease the likelihood of a significant difference between your advance credit payments and your actual premium tax credit. Changes in circumstances that can affect the amount of your actual premium tax credit include:
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