Is it too late to amend 2023 tax returns for me and partner (filed separately) to change dependents?

[f404]

Hi Tax Pros!

I wanted to get your opinion and guidance on the following situation.

My partner (we're not legally married, but we have 1 child together) and I filed separately in 2023.

When she did her 2023 taxes, she forgot to include her Form 1095-A and did not fill out and include Form 8962 from HealthCare gov for health premium tax credits for her and our daughter for the entire year. She made very little in 2023.

When I did my 2023 taxes I filed as head of household and include our daughter as a dependent. I also didn’t know about the form 1095-A so it wasn't included (nor was Form 8962 filled out). I made a lot more income in 2023 than my partner (so I think wouldn't qualify for those health premiums tax credits?).

Fast forward to today, the IRS sent me a Letter 12C and is requesting a copy of the 1095-A form and a completed Form 8962. According to my calculations this could cost me upwards of $9,000 (value of tax credits from Form 1095-A) or is it only about half since I'm only claiming my daughter as a dependent?

What is the best course of action to save as much money as possible? I was thinking of having my wife amend her return to claim our daughter as a dependent and to amend my return to not have a dependent - is this allowed and advisable? What are your thoughts on best course of action?

Obviously I want to keep everything legal but I also want to minimize my wife's and my tax liability (in total).

Thank you!

[Bsch4477]

She claims the child but files a single since based on your income you provide the cost of the household. You file as single with no dependents. 

[f404]

She did. I have never used healthcare.gov

[f404]

@Bsch4477 thank you for this useful info!

would this alternative process work:

Since IRS is asking me to fill out Form 8962 because my dependent daughter was on my partner's 1095-A form, but with allocation of 0% - then the premium tax credits would then apply entirely to my partner, correct? 

[Bsch4477]

Since the child is your dependent I don’t think that you can do that. 

[Opus 17]

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@f404 wrote:

@Bsch4477 thank you for this useful info!

would this alternative process work:

Since IRS is asking me to fill out Form 8962 because my dependent daughter was on my partner's 1095-A form, but with allocation of 0% - then the premium tax credits would then apply entirely to my partner, correct? 

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I don't have any experience with the PTC, so I can't answer this specific question.

But, if you think you will do better by filing amended 2023 returns to move the dependent around, then your reply to the current IRS letter would be to say, "We are filling amended 2023 returns so that the child's mother, in whose name the 1095-A was filed, will be claiming the credit, and the child will be removed from my 2023 tax return."  (or something similar like  "I'm not going to send updated PTC info since we are amending instead, but if you have questions after the amended returns are processed I will be happy to follow up.")

In other words, don't submit any documents to explain the 2023 return if you plan to amend them instead, because then the documents you submit would no longer apply. Don't mail the amended returns to the office that sent the notice unless they specifically ask, you should either e-file or mail the amended returns using the normal process.