My mom recently became a green card holder and we live in the state of NJ where there is a 5 year wait period for green card holders to be eligible for medicaid. I am considering running payroll for her as an household employer in order for her to be eligible for subsidies under obamacare. Is this legal to do so?
The direct answer to your question is "Yes", if she does legitimate work for her pay (in other words, you can't pay her $14,000 a year if she only works a few hours a week).
HOWEVER, you may not need to do that. There is a provision that aliens that are not eligible for Medicaid still qualify for the Premium Tax Credit if their income is lower than the usual threshold. The 'catch' of that is that one of the other rules is that she can't qualify as your dependent on your tax return. If her income is over $4050, that would disqualify her from being a dependent.
(5) Individuals lawfully present. If a taxpayer's household income is less than 100 percent of the Federal poverty line for the taxpayer's family size and the taxpayer or a member of the taxpayer's family is an alien lawfully present in the United States, the taxpayer is treated as an applicable taxpayer if -
(i) The lawfully present taxpayer or family member is not eligible for the Medicaid program; and
(ii) The taxpayer
would be an applicable taxpayer if the taxpayer's household income for
the taxable year was between 100 and 400 percent of the Federal poverty
line for the taxpayer's family size.
What Household Employees duties would she perform? Does she live with you?
<a rel="nofollow" target="_blank" href="https://www.healthcare.gov/immigrants/lawfully-present-immigrants/">https://www.healthcare.gov/immigrants/lawfully-present-immigrants/</a>
She lives with me and performs all the house chores like cooking and cleaning. I cannot add her to my health insurance plan since parents are not eligible under my plan.
The direct answer to your question is "Yes", if she does legitimate work for her pay (in other words, you can't pay her $14,000 a year if she only works a few hours a week).
HOWEVER, you may not need to do that. There is a provision that aliens that are not eligible for Medicaid still qualify for the Premium Tax Credit if their income is lower than the usual threshold. The 'catch' of that is that one of the other rules is that she can't qualify as your dependent on your tax return. If her income is over $4050, that would disqualify her from being a dependent.
(5) Individuals lawfully present. If a taxpayer's household income is less than 100 percent of the Federal poverty line for the taxpayer's family size and the taxpayer or a member of the taxpayer's family is an alien lawfully present in the United States, the taxpayer is treated as an applicable taxpayer if -
(i) The lawfully present taxpayer or family member is not eligible for the Medicaid program; and
(ii) The taxpayer
would be an applicable taxpayer if the taxpayer's household income for
the taxable year was between 100 and 400 percent of the Federal poverty
line for the taxpayer's family size.
Sorry. The legal language isn't quite clear to me. The way i understand this is that if her income is too low( like 10k per year), then she is not eligible for subsidies under obamacare in NJ. If i claim her as a dependent on my tax return , then my income gets attached to hers and then again she is not eligible for any subsidies under obamacare and i will have to bear the full cost of insurance which is around 700-800$ in NJ the last time i checked.I don't care about claiming her as a dependent on my tax return as long as she can get decent insurance that doesn't cost a crazy amount.
The legal gibberish does say that she qualifies. The 'usual' rule is that if her income is below $11,770, she would not qualify. But this is a special provision for people such as your mom, so she DOES qualify. It says if her income is "less than 100 percent ... is treated as an applicable taxpayer", which means that she DOES qualify (assuming she meets the other requirements).
As a side note, if you do hire her as a Household Employee, be sure you know the rules in your State. Your State could require Worker's Compensation Insurance and/or State Unemployment Insurance.
NJ Annual Filers (Household Employers). An employer whose only employees are household workers may report and remit gross income tax withholding and other payments (contributions for unemployment insurance, healthcare subsidy, workforce development, disability insurance, and family leave insurance) on an annual basis. Form NJ-927-H, the “Domestic Employer’s Annual Report,” and Form WR-30, Employer Report of Wages Paid, must be filed electronically on or before the January 30 next following the close of the calendar year. These forms can be filed on the Division of Revenue’s Web site.
<a rel="nofollow" target="_blank" href="http://www.state.nj.us/treasury/taxation/njit31.shtml">http://www.state.nj.us/treasury/taxation/njit31.shtml</a>
<a rel="nofollow" target="_blank" href="http://www.myhomepay.com/Answers/State-Nanny-Tax/NJ/Overview">http://www.myhomepay.com/Answers/State-Nanny-Tax/NJ/Overview</a>