My spouse has no health insurance from Jan 2018 to August 2018. After Sept 2018, she came to U.S. and had insurance coverage from school. Do we have to pay penalty?

[ironcake]

She was a nonresident alien from Jan 2018 to August 2018, and had no health insurance. From Sept 2018, she came to U.S. on a F1 visa to start her school here and had insurance plan from school thereafter. (Her F1 status allows her to be exempt from the substantial presence test for the first 5 years which means she is Nonresident Alien for the entire 2018 year, right?)

She had a 1095-B from here school insurance plan stating that she satisfied the "individual mandate" under the ACA for the 2018 tax year, and clear marked Sept-Dec 2018 of insurance coverage for year 2018. If she files her tax separately, I think she is not subject to the insurance penalty. But the question rises now as we want to file jointly as married.

We got married last year after she came to U.S., and I am a resident alien for the tax year 2018. I want to treat her as a resident alien to file jointly. In such case, she 'is' technically a resident alien for the year 2018. My question is do we have to pay penalty for the months that she had no insurance coverage? 

FYI: during Jan 2018 - Aug 2018, she was partially present in U.S. for about 100 days on a B1/B2 visa, and the rest of days out of U.S during that period of time.

[KarenJ · Accepted solution]

No she does not need to pay a penalty.  The IRS allows individuals an exemption for the first year they are in the US.  They allow this even if you choose to file married filing jointly in her first year in the US.  Please see the attached link , question number 8 https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-indivi...

 Individuals who are exempt under this rule include:

• Nonresident aliens;
• Dual-status aliens in their first year of U.S. residency;
• Nonresident aliens or dual-status aliens who elect to file a joint return with a U.S. spouse;
• Individuals who file a Form 1040NR or Form 1040NR-EZ (including a dual-status tax return for their last year of U.S. residency); and
• Individuals who are claimed as a personal exemption on a Form 1040NR or Form 1040NR-EZ

You will need to attach a statement electing to file a  married filing jointly tax return.  Please see page 9 , Nonresident Spouse Treated as a Resident and How to Make the Choice. https://www.irs.gov/pub/irs-pdf/p519.pdf

You will not be able to e-file your return. You will need to print and attach the statement to your tax return before mailing to the IRS.

TurboTax does not list the above exemptions under Health Insurance. You will need to choose the option: I'll pick who had it and which months. 

According to the instructions for Form 8965 under types of exemptions, page 3, the type of exemption she falls under is Code c, the same code that is used for the option in TurboTax  for Spent 330 days or more outside the US.  So you will need to check this option to receive the exemption.

https://www.irs.gov/pub/irs-pdf/i8965.pdf

[ironcake]

Thank you very much for the answer. I think your explanation makes perfect sense.