Married this year in Sept. Wife had Obamacare prior to that and estimated wages correctly. Filing jointly, how can we reflect this situation in TurboTax to avoid penalty?

[Zbucklyo]

In this situation, for the purposes of calculating any payback of advance premium tax credits (this is not a penalty, just a squaring up of how much she received in APTC compared to how much she should have received), you can treat your annual household income for the months she was single as half of what it actually was.

TurboTax should give you the option of this alternative calculation.

[brettwalls]

This is very helpful, thanks.  I will dig deeper l, as I don’t immediately see this as an option in TurboTax.  For clarity, even though the marriage occurred in September, the calculation is half of total household annual income (her’s and mine together)?

[Zbucklyo]

Yes.  Suppose you earned $60000 for the year and she earned $40000.  Ordinarily, her premium tax credit would be based on a household income of $100,000 for the entire year.  Instead, the premium tax credit can be based on household income of $50,000 through August, then $100,000 thereafter.

This may reduce how much of the premium has to be paid back, but if your income is sufficiently high, it won't help.  See IRS Publication 974, near the end there is a section on the first year of marriage.

[brettwalls]

This is extremely helpful and much appreciated.  In our case, our incomes are dramatically different so aim considering filing separately to avoid having to pay it all back (which is essentially how it pencils out).  Any other angle I’m missing?  Thank you again very much!

[Zbucklyo]

Yes, if you file separately, all the APTC must be paid back anyway (no APTC on married filing separately) so there is no advantage to doing so if all of it is being paid back filing jointly.