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Do I still need to pay the insurance penalty even though I was abroad for eight months and uncovered in the US for only two?

Long time TurboTax customer reporting in: I worked, and my family and I lived, abroad from 2016 to August of 2018. While abroad in 2018, we did not have insurance. Back in the US, I got a new position that started in October 2018 and we got coverage the same month. Thus, we were uncovered in the US for at most two months. When I run through TurboTax’s platform, it tells me that I will still need to pay the penalty for all of the months we were not covered, even though we were abroad. (I suppose we were not abroad long enough to trigger the foreign exception to the penalty?) I’m hoping to confirm that this is right. It is not an insubstantial amount of money for the four of us (our second child was born abroad in June 2018, so she would still need insurance?). Related, I suppose because we were not abroad for a long enough period I will be unable to apply for the foreign income exclusion? Thank you in advance for any assistance on this. 

1 Reply
Level 14
Level 14

Do I still need to pay the insurance penalty even though I was abroad for eight months and uncovered in the US for only two?

Let  me first stipulate what I gather from your post:

(a) you were abroad ??/??/2016 through 08/??/2018.

(b) you had earnings abroad

(c) Oct. 2018, you started a job in the USA

(d) From Aug/2018 through Sept/2018 you did not have health coverage, which started  Oct/2018.

Q-1. Are you a citizen/ Resident of the USA and were you the same during 2016 through 2018 ( i.e. the period you were abroad )?

Q.2. What about your spouse and children?

Q.3. While abroad, did you exclude your foreign earnings?  If not why not ?  What country were you stating in ?

Absent any other issues ( based on your answers to the above Qs ), I do not understand why you would not have been ineligible to exclude your foreign earnings for the year 2018; nor why a short coverage gap of health insurance is to be penalized.

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