For 2021, I had my nondependent 23 year old child on my marketplace policy for the first four months of the year. I removed her from my marketplace policy at the end of April, at which time she commenced coverage on a non-marketplace policy, with no advance credit payments, that she obtained directly from a private insurer. I have read the instructions for Form 8962 and cannot figure out how to (or whether I need to) do any allocation for the first four months of the year. The instructions, and various examples provided within, do not appear to address this circumstance.
For the four months that your daughter was on your policy you can allocate the amounts in any way you both agree. This means you can allocate 100% to yourself, or you can split it anyway you choose. There is not a rule on what percentage to allocate to who.
So does this mean that my daughter is required to file Form 8962 with her return, even though she was on a non-marketplace plan after leaving my plan and presumably will not be receiving her own Form 1095-A? If so, how is Part IV of Form 8962 completed since it requests a policy number (and other information) from Form 1095-A? And how would columns A and B of Part II of Form 8962 be completed with respect to the months she was on my policy? Thanks.
Yes, for the time she was on the policy she will need to enter the 1095-A that you received on her return exactly as it appears. After you enter the 1095 A you will both check the box that says this is a shared policy. On the next screen you will then both enter the other persons Social Security Number as the other taxpayer that you shared the policy with as well as the months the allocation started and stopped, and the percentage of allocation you are each taking. If you are taking 100% and she is taking 0% enter those number or whatever other percentage you have agreed on.
She does not need to enter anything for her insurance as an employee.
Thank you! If you would indulge me again -- to make sure I understand correctly, I can enter 100% on my return, and my daughter 0% on her return (assuming she agrees), in columns e, f, and g on line 30 of our Forms 8962 for the months she was on my policy, correct? (FWIW, I paid the entire policy premium for the months she was on my policy.)
Can you also confirm that I should not include my daughter in completing 1 through 8a of my Form 8962 and that, with respect to lines 12-23 of her form 8962, my daughter should only complete lines 12-15 and leave lines 16-23 blank inasmuch as she had no marketplace plan (or employer-sponsored plan) for May-December 2021.
Also, I do not see a box to check on Form 8962 that refers to a shared policy (unless you are referring to line 9). Finally, as best as I can determine, in our circumstance neither I nor my daughter would complete line 10 of Form 8962 since the instructions lead to that conclusion.
Apologies for all the questions, but I want to make sure I get this right. You have been very helpful, and your assistance is much appreciated.
Yes, you can allocate the premiums however you like. The instructions above (specifically marking the 'shared policy' box refers to the TurboTax program. If you are in TurboTax, you would mark that box and then TurboTax will take the information you entered and calculate any Premium Tax Credit, taking into account any Advance Premium Tax Credit you received. See image below.
Whenever you are entering 1095-A into TurboTax, enter all of the information and let TurboTax complete the 8962 for you. You will only enter information from your 1095-A on each tax return - no information from her non-marketplace insurance on the federal portions of your returns. She may need info from her private plan, but that would be entered on her state return if applicable.
For your daughter's policy, choose the instructions based on what is in columns B and C of your 1095-A that included her for those first few months.
Form 8962 and full Instructions for Form 8962 If you are manually submitting the 8962, you will need these instructions. See Part ll. If you are using TurboTax, this is the screen you will see after you enter the 1095-A data on the previous screen.
Thanks again. What I find curious is that, if I understand all this correctly, if I apportion the allocation 100% to me and 0% to my daughter, the end result, in terms of the net premium tax credit, is that (for the months she was on my policy) I will reap the benefit of the credit as though she were my tax dependent.
Yes ... this is a quirk of the system as it was set up. Also you may have 2 form 1095-As to enter since you did a policy change ... make sure you check your account online : www.Healthcare.gov
In a similar situation, my daughter was included on my ACA (separate provider in her college town), anticipating her as a dependent. Then, she graduated and moved out in midJune with a full ride fellowship to grad school, and is paying her own way. So, I will no longer claim her as a dependent. We took her off the ACA after July when she had her own insurance.
I think I understand (correct me if wrong) that I will allocate allocate 100% of the amounts to her and 0 to me, as she is filing independently. BUT, my question is on the gross income I report. Normally I would have included her earnings when reporting the "dependents income" info in TT for the 1095A. Is it correct that I no longer include these since she is not a dependent?
Yes, that is correct. You no longer include her income in the section that asks about dependents income since she is no longer a dependent on your return. Anything related to her insurance now goes on her return.
You can choose to allocate 100% to her and 0% to you, although, since the Advanced Premium credit was based on your income, this may result in her paying back the premiums for you and her. It may also result in her getting a bigger refund if you did not get a full credit for the premiums.
You do not have to do 100% and 0%. If you are married and there were 3 people on the policy you can also choose to split is in thirds and give her 33% and you take 67% or any other amount you choose to claim. Basically, the only requirement is that the numbers add up to 100% between your returns.
Thanks. I gave her 900/mo to pay her college apartment, elec, food - and she paid the ins premiums for her piece of my plan through July - because they sent her the bill. Plus I paid 4000 towards college tuition. That came to 10300 parent support. She has 10500 W2 income.
Since she contributed >50%, moved out in June (so lived with us <half year), and paid the premiums herself, it seems proper to allocate all 100% to my daughter. THANKS AGAIN!!
Also, I found that with her portion of the ACA on my taxes, i had to pay back almost 100% of her savings for some reason - glitchy VA predictive model. By moving that portion of ACA to her taxes plus removing her 10k income from my ACA total AGI, I have a "wash" even with losing the dependent credit (500) and education credit (2500). Meanwhile she gets back 1000 refund from education credit plus 0 "taxable" income so she does NOT have to repay the ACA credit.
For what it's worth, if you were able to claim her as a dependent you would not need to include her income for purposes of calculating the ACA credit. This is because you only have to include her income if it is at a level that requires her to file a federal return. 10.5K does not reach that level.
Hi - you were so helpful before. I have another question...
I had been giving my daughter $900 / month thru July ($6300 for the year) thru July, but she then got a fellowship and moved out-of-state for graduate school. She made over $10k for the year plus now has a full ride at UNC. Despite that I had included here thru July on my ACA, I feel I can no longer legitimately claim here as a dependent. I removed her for Aug/Dec from ACE because she had separate insurance through UNC.
So, my Q is, when allocating the percentages for the ACA between her and I, can I list the same ACA number twice on 2 different allocation rows (once for months Jan-June when she lived "with us" and second for July after she moved to North Carolina? OR, do I just put a single row for all 7 months and split it 85%/15% ? If the former, I would allocate Jan-June 100% to me, and then allocate July 100% to my daughter.
Enter the 1095-A exactly as show on the form.
TurboTax then asks for an allocation % in a follow-up question; that's where you would enter 100%. The allocation is NOT on the Form 1095-A; that is up to the parties involved to decide when filing their taxes.
Since you only had had her on the policy from January to July, that would be correct.