Advice needed on resolving now estranged dependent adult college student who intentionally claimed himself and filed prior to us filing and claiming him as a dependent?

[WiscBroker]

In 2018, my 20 year old son was attending full-time college and only worked part-time in the summer.  His living expenses were paid from a combination of my cash contributions, his part-time work, his financial aid, and money withdrawn out of a 529 account.  I paid for all of his insurance (and he was listed as a dependent on our Marketplace application and we received advanced premium tax credits based on that status) and medical expenses. Since last year, he has decided to cut off most contact with us, except for one email he sent stating we would not be able to claim him as a dependent for 2018.  He said he provided more than half his support and earned more than $4,150. I dispute that completely as I have records of how much his expenses were and how much we provided.  I am also aware his income doesn't matter even if it exceeds $4150 because of his full-time student status and our level of support. We are at a stalemate right now.  1. He is refusing to cooperate and provide more information.  2. He said he already filed and told his tax adviser said our return would be rejected if we tried to claim him as a dependent.  FIRST QUESTION: Since personal exemptions are gone- is this even really a concern anymore?

SECOND QUESTION: can we file and claim him as a dependent, and if we do, will it actually be rejected and if so, then what happens?  If not rejected, what will happen next?  THIRD QUESTION:  Since he as on our Marketplace application as a dependent, we received APTC.  Now if I file without him being a dependent, how can I reconcile the APTC if he is not our tax dependent?  My understanding is there needs to be an agreement between both parties on how to split the APTC and premium responsibility. He is ignoring our requests and not responding.  How do we come to an agreed amount?  Should I just claim 100% of premium and APTC on my return? (Again this is assuming I file without claiming him as a dependent).  ALSO, I am thinking his filing is incomplete since I did not provide to him a 1095a for the Marketplace APTC (and he would not have access to it since I am the primary).  Will he get notice from the IRS to ask for a Form 8962 in follow-up?

[Vanessa · Accepted solution]

No, if he provided more than half of his own support you cannot claim him as a dependent

Since you do not have another agreement, you can take the number of people on your tax return and divide it by the number of people on the policy.  For instance, if you have no other dependents and are filing a joint return with your spouse, there would be 2 people on your tax return and 3 people (you, your spouse and your son) on your policy.  So you would divide 2/3 which would be 67%.  You would then enter 67% for all 3 percentages. 

If this creates a discrepancy with his return, the IRS will contact both of you.

[WiscBroker]

Thank you for the fast reply!  I was wondering, since I paid for all his medical and health insurance and he was on our policy, I read that technically I could claim 100% for the APTC healthcare policy.  I tested it with my TurboTax software both ways and if I take 67% then it will cost us almost $1500 in additional taxes.  

[Vanessa]

Yes, since you paid 100% of the premiums you can enter 100% for the Premiums and 67% for the rest.

Unfortunately, paying for medical insurance is only a small part (although expensive sometimes) of providing more than half of his cost of living.  Therefore, if he paid more than half, you cannot claim him.

[WiscBroker]

One more related question:  When I attempt to enter the percentages the program says "Social Security Number policy allocations for a form 1095a linked to a business, Business Related Premiums Smart Worksheet below, are not supported."  I also get that error under SLCSP and the other premium % boxes.  I tried unchecking the box on the prior page "Self-Employed and bought a Marketplace plan" and I still get the error messages.  I've seen online this is an issue others have reported.  How will be able to get past this (only way I can see is to claim him as a dependent but you are saying I cannot).