Can I file a dependent on my taxes when someone else got marketplace insurance for them?

[moparsandharleys]

My granddaughter lives with me and I file her on my taxes. Her parents carry her on their insurance through the marketplace. I am getting an error when filing my taxes stating I have to file a 1095A. Any recommendations to get past this?

[JillS56]

This is an unusual situation.   How old is your granddaughter?  Typically, this happens when parents have an adult child (in college under the age of 26).   If the parents are not claiming the dependent, then the 1095-A is apportioned by 3 and the dependent will claim their portion on their return.   

I believe that this would be true for the 1095-A in your case.  You would need to enter her portion of the 1095-A form into your return.    If you are claiming her, you should ask her parents to provide you with a copy of the 1095-A.   They should report 2/3rds of the amount and you report 1/3rd of the amount.  The problem you might find is if your income is above the level to which her parents qualified for marketplace insurance and any stimulus, you may have to repay the portion of the subsidy (if any) that is attributable to her.  

There is another way to divide up the amount which is by percentage.   The 1095-A will ask questions regarding the proper percentage.   How is shared policy allocation calculated?  In the event your client cannot agree upon a reasonable allocation percentage, the allocation percentage will typically be equal to the number of individuals on the shared policy that your client can claim on their tax return, divided by the total number of individuals on the policy.

It may be possible that you may not be able to e-file your return.

On parents 1095-A but not on their return

[Wyldaisy]

Hello,

For a qualifying adult child 28 years old who made less than $4,700 in 2023 and who now subsequently can be a dependent on parent tax return, would it be appropriate to include the 1095-A the qualifying adult child was issued under the adult child’s tax ID on the parent return (the parent did not participate in the marketplace, insurance was through employer).  The ability to be a dependent was unexpected and related to adult job layoff, but the market place insurance was already in place.

If this is the case, most of the subsidy would need to be paid back due to income of parent, but would primarily be offset by the change in the parent’s standard deduction changing from Single to Head of Household.  The real savings would come from savings on the California state return that would also go from Single to Head of Household with not impact from subsidy repayment.

The adult child will still file 2023 taxes noting that they can and will be claimed as a dependent on someone else's return, and I assume would make no entry for the 1095-A received in their tax id in that section of Turbo Tax of their return. (This would now be on parent return)

The adult child did receive employment opportunity in another state and moved permanently in Nov. 2023, but lived with the parent for 11 months of 2023.  Not sure if this has an impact on the situation.

Not sure if the fact the 1095A is in the child’s tax ID will cause reject of the parent tax return if the parent did not have insurance through the marketplace but is filing that info because they are now claiming the child as a dependent.

Would this also mean no opportunity to efile?  Better to file paper?

Thank you

[Vanessa A]

Would it be appropriate to include the 1095-A the qualifying adult child was issued under the adult child’s tax ID on the parent return (the parent did not participate in the marketplace, insurance was through employer) Yes, if you are claiming your adult child as a dependent on your return and they receive insurance through the marketplace, you would be required to enter their 1095-A on your return.  If you do not include the 1095-A, your return will be rejected.  

The adult child did receive employment opportunity in another state and moved permanently in Nov. 2023, but lived with the parent for 11 months of 2023.  Not sure if this has an impact on the situation. No, as long as they earned less than $4,700 for the year and you provided over half of their support, then this will not impact the tax situation since they are your child.  If this was NOT  your child, say just a friend, you would not be able to claim them since they did not live with you for the full 12 months of the year. 

Not sure if the fact the 1095A is in the child’s tax ID will cause reject of the parent tax return if the parent did not have insurance through the marketplace but is filing that info because they are now claiming the child as a dependent. No, this will not cause a rejection.  If you filed without the 1095A, it would cause a rejection. 

If this is the case, most of the subsidy would need to be paid back due to income of parent, but would primarily be offset by the change in the parent’s standard deduction changing from Single to Head of Household.  The real savings would come from savings on the California state return that would also go from Single to Head of Household with not impact from subsidy repayment.  It sounds like you have in some way looked at the numbers both ways, but yes, if your income is over 400% of the Federal poverty level , you will need to repay the Advanced Premium Tax Credit on your return. I don't know if you did this on TurboTax with and without your child, but if you did not, then to be sure that the change in filing status and the change on your state return would give you a better result it would be a good idea to do it both ways. 

Would this also mean no opportunity to efile?  Better to file paper? Nothing you have described in your situation would keep you from e-filing your return.  It is better to e-file whenever possible as paper takes much longer to process. 

I'm on my parents' 1095-A form. What do I do on my return?

Rules for Claiming a Dependent on Your Tax Return

[Maria18_]

Hi , I have the same problem. My brother reports my kids but their dad got them marketplace insurance . They rejected my brother taxes. What can be done ? Or how did you fix your problem? 

[BillM223]

Vanessa has the right answer above: the taxpayer who claimed a child or children as dependents must file the 1095-A for those children, even if some other taxpayer enrolled the dependents in the ACA.

Your brother will have to get a copy of the children's 1095-A and enter it on his return. Then his return will be accepted.

[Maria18_]

Just got intel the dad put he earns 20K year on the marketplace insurance, but if my brother makes more than that would affect his taxes?

[Maria18_]

Just got intel the dad put he earns 20K year on the marketplace insurance, but if my brother makes more than that would affect his taxes?

[BrittanyS]

Yes it would affect his taxes.  The credit received throughout the year is based on an estimate of income for the year.  If he received more income than expected and did not update Marketplace, he will be charge for the overage he received on his tax return.  For more information on 1095-As, see the link below:

• 1095-A

[Maria18_]

Why would he update it for its 2 different people with different income ? The dad of my kids got them the marketplace insurance he put he earns 20k . My brother has always reported my kids he earns more than the dad of the kids . But only new thing is that the dad of my kids got them insurance . 

[Vanessa A]

The Advanced Premium Tax credit is based on the income of the person who claims them on their taxes at the end of the year.  When you file your taxes, form 8962 must be included for anyone who had insurance through the marketplace and either had or wishes to claim the Premium Tax Credit.

Since your kids father reported his income, he received the Premium Tax Credit in advance so the amount he had to pay for their insurance was much lower.  When your brother claims them, the credit is reconciled with his income and if he makes more than your brother, he would likely have to pay some or all of the credit that the kids father received.  If your brothers household income is more than 400% of the Federal Poverty Level, then he will be required to repay the entire amount of premiums that your kids father received in advanced.  If your brothers household income is less than 400% of the Federal poverty level, then he may have to pay back some but not necessarily all of the credit he was not eligible for.  

Basically, the credit follows the person who is covered by the insurance, not the person who "purchased" the insurance.  Any person that claims them as a dependent is then responsible for matching the credit to their income. 

This can also work in reverse.  If your kids father would make much more than your brother and your brother made $20,000, then your kids dad would pay more in premiums but your brother (if he is claiming your kids) would get the credit for the premiums paid.