Premium Tax Credit for Senior parents

[lt21811]

1. My senior parents had no income in 2024. They purchased insurance (effective 1/1/2025) through Marketplace and received Premium Tax Credit. Do they need to file Federal return for  2024? If yes, what do they report on the return?

2. Can I claim them as dependents on my tax returns if I paid most of their rent and expenses in 2024?

In particular, if they have to file their own return to claim Premium Tax Credit, can I still claim them as dependents on my tax returns?

[JotikaT2]

It sounds like your parents were insured under a Marketplace insurance plan.  They should have received a Form 1095-A to claim the Premium Tax Credit they may be entitled to on their tax return.  They will need to file a tax return.  Please see where do I enter my 1095-A for steps to assist your parents in preparing their tax return.

Since they are claiming the Premium Tax Credit, they cannot be claimed as dependents on your tax return.  One of the requirements for claiming the credit is that you cannot be claimed as a dependent on someone else's return. Please see What is the Premium Tax Credit for more details.

[lt21811]

Thanks for responding to my question.

My parents is under a Marketplace insurance plan starting only from 1/1/2025. Can I still claim them as dependents on my 2024 tax return?

[MonikaK1]

Yes, if your parents meet the qualifications to be claimed as dependents, you can claim them for 2024 if their Marketplace insurance didn't start until 2025.

You must have provided more than half of your parent's support during the tax year in order to claim them as a dependent. The amount of support you provided must also exceed your parent's income by at least one dollar.

There are special tax rules for parents. If your qualifying person is your father or mother, you may be eligible to file as head of household, even if your parent doesn’t live with you. However, your mother or father must meet the qualifications of being a dependent. 

For example, you must pay more than half the cost of keeping up a home that was your parents’ main home for the entire year. If you pay more than half the cost of your parents’ senior living or assisted care facility, that counts as paying more than half the cost of keeping up your parents’ main home. See this TurboTax blog article. Also:

• Consider the cost of food that you provide.
• Remember to include utilities, medical bills and general living expenses that you also pay.
• Compare the value of support you provide with any income, including Social Security, that your parent receives to determine whether you meet the support requirements.

The gross income test would also need to be met. See this TurboTax tips article for more information.

Amounts spent for a dependent's care might qualify for the Child and Dependent Care Credit. See this TurboTax tips article for more information.

@lt21811