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Insurance penalty waiving

Me and my wife moved to US in June 2017 from another country where we have been living all the time before. So I understand, that we could be considered as resident aliens (as we were physically pesented in US more than 31 days in 2017). Wife got insurance in July, me - in September. Theoretically, I must pay no insurance coverage penalty for 3 months that I was uncovered (June-Aug), but Turbotax calculates penalty accoring to the fact that I was uncovered from January (see screenshot) even if my first entry to US is in June. I guess that I must select a checkbox "Resident of foreign country or U.S. territory" to waive penalty but I confused because description saying that "the tax penalty for not having health insurance in 2017 can be waived if the individual was a U.S. citizen or resident but lived in a foreign country or U.S. territory for at least 330 days within a 12-month period that includes all or part of 2017". So what should I do to correct my penalty amount?

1 Best answer

Accepted Solutions
DanielV01
Expert Alumni

Insurance penalty waiving

You are correct.  That exception (Resident of foreign country or territory) does apply to you.  This will exempt you for the months of January through June.  Since you just moved to the U.S for the first time, and lived elsewhere before, you were residing in a foreign country (not in the U.S) for at least 330 days prior to the time you arrived in the United States.  This website provides more information (click on link):  https://www.healthcare.gov/exemptions-tool/#/results/2017/details/resident-alien

In fact, because January through June are exempted from the penalty, you will be entitled to a second exception for July and August, the short gap exception.  Since you obtained insurance in September, you are considered to have insurance for all of September.  That means that the only two months left uncovered are July and August.  Since this is two months or less, you may exempt these also.  Please see this second link:  https://www.healthcare.gov/exemptions-tool/#/results/2017/details/short-gap

In TurboTax, make sure you mark that you had coverage from September to December.  After selecting that you were out of the country from January through June, the complete penalty should be waived.  TurboTax will automatically apply the short-gap exception on your behalf.

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3 Replies
DanielV01
Expert Alumni

Insurance penalty waiving

You are correct.  That exception (Resident of foreign country or territory) does apply to you.  This will exempt you for the months of January through June.  Since you just moved to the U.S for the first time, and lived elsewhere before, you were residing in a foreign country (not in the U.S) for at least 330 days prior to the time you arrived in the United States.  This website provides more information (click on link):  https://www.healthcare.gov/exemptions-tool/#/results/2017/details/resident-alien

In fact, because January through June are exempted from the penalty, you will be entitled to a second exception for July and August, the short gap exception.  Since you obtained insurance in September, you are considered to have insurance for all of September.  That means that the only two months left uncovered are July and August.  Since this is two months or less, you may exempt these also.  Please see this second link:  https://www.healthcare.gov/exemptions-tool/#/results/2017/details/short-gap

In TurboTax, make sure you mark that you had coverage from September to December.  After selecting that you were out of the country from January through June, the complete penalty should be waived.  TurboTax will automatically apply the short-gap exception on your behalf.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Insurance penalty waiving

@DanielV01 Great to see your insightful reply to this post.

I'm in a similar situation, as described in this post.

Could you please take a look at the same and comment?

ErnieS0
Expert Alumni

Insurance penalty waiving

There is no federal penalty in 2021 for not having insurance coverage @tbudd .

 

Beginning in Tax Year 2019, Forms 1040 and 1040-SR will not have the “full-year health care coverage or exempt” box and Form 8965, Health Coverage Exemptions, will no longer be used.

 

You need not make a shared responsibility payment or file Form 8965, Health Coverage Exemptions, with your tax return if you don’t have minimum essential coverage for part or all of the year.

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