If a parent CAN claim an adult dependent (under 24, full time student and meets all other criteria), but chooses not to, who is responsible for health care coverage?

[mjb3]

It is my understanding that when the adult dependent files, s/he would say that someone else CAN claim them on their return. The adult dependent didn't make enough to even have to file, but wants the refund due.  I think the parent does not want to be held responsible for health care coverage, so is choosing to NOT claim the adult dependent...

[TaxGuyBill · Accepted solution]

This is something that I was recently corrected on.  I originally thought as bsch4477 said, but there are exceptions to that rule, and this seems to fix one of the exceptions.

If the child is not required to file a tax return (his income is less than the exemption amount), that makes him an "exempt individual" IF the parent does not claim him as a dependent.  As such, the parent does NOT owe the penalty IF the parent does not claim the child as a dependent.

If the child DID make enough that he was required to file, the parent would owe the penalty even if the parent did not claim that person as a dependent.

On the other hand, the amount of money the parent saves by claiming the kid as a dependent MIGHT be larger than the penalty for not having insurance.  This could particularly be true because of the educational credits.

[Bsch4477]

Taxguy...can you cite a source for that exception?

From this site:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/Questions-and-Answers-on-the-Indivi...>

Who is Affected

9. Are children subject to the individual shared responsibility provision?

Yes. Each child must have minimum essential coverage or qualify for an exemption for each month in the calendar year. Otherwise, the adult or married couple who can claim the child as a dependent for federal income tax purposes will generally owe a shared responsibility payment for the child.

[TaxGuyBill]

It involves wading through the legal gibberish in the Regulations.  I'm posting the lengthy discussion about it in the Lounge.
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/lounge/3009077">https://ttlc.intuit.com/lounge/3009077</a>

[Bsch4477]

TaxGuyBill is entirely correct!!

[mjb3]

Thank you, both. Very helpful!

[mjb3]

Thanks!

[Bsch4477]

If a taxpayer CAN claim someone as a dependent, that taxpayer is responsible for providing health coverage even if the dependency is not claimed.

[mjb3]

YES!  Thank you!  That is my understanding, as well, but I am getting challenged on that answer.  I suppose the grey area could be the interpretation of providing more than half of the adult dependent's support.  I claim the parent DID provide over half the support since the dependent lived in the home rent free...What are your thoughts on that?

[Bsch4477]

If the dependent is a qualifying child, which seems the case in view of what you posted, the rule is that the child cannot have provided more than half of his support.  Yes, room and board are part of support.

[mjb3]

Yes, qualifying child.  Thanks again.