Should wife and I file separately to avoid healthcare premium tax credit repayment.

[cbuska]

Hi all,

My wife and I got married May 4 in 2018.

Her income had met the requirements where she was given a Premium Tax Credit to purchase insurance from the marketplace. I had insurance through my job the entire year. After getting married I thought it would be easier to just keep our separate plans and move her to mine start of 2019.

It looks like if we file Married Jointly, our combined income would require us to repay the entire Tax Credit she received. If we do Married Filing Separate can we mitigate this repayment at all? Her separate income still met the requirements for the tax credit.

If not, instructions for Form 8962 Line 9 indicate there is an alternative calculation method for Year of Marriage. How can we use that alternative calculation in TurboTax? It asked us when we got married but still says we need to repay the entire amount.

[Leonard]

No, if you file married separately you wife will lose her eligibility completely for the Premium Tax credit and have to repay all of her credit.

The two links below have information that you may find useful.

https://ttlc.intuit.com/replies/4234767

https://www.irs.gov/affordable-care-act/individuals-and-families/the-premium-tax-credit-the-basics

[cragsdog]

NOT TRUE and we lost thousands by believing this. My husband would NOT have had to pay back all of his PTC had we filed married separately. They do apply an income standard to what you are required to pay back. It's even calculated in Turbotax as I tested recently. Unfortunately I also found out you can't amend from filing jointly to filing separately.

Turbotax should somehow make this information more prominent.

[cragsdog]

You may not have to repay the entire amount if you file married separately. If it's not too late, test out the return that way in TurboTax. My husband and I could have saved thousands had we known this.

[BMcCalpin]

It is unlikely that (1) you can file separately and (2) still take the PTC.

The IRS instructions for form 8962 (https://www.irs.gov/pub/irs-pdf/i8962.pdf) state the following:

"You can take the PTC for 2018 if you meet the conditions under (1) and (2) below (page 2)...

2.You are an applicable taxpayer for 2018. To be an applicable taxpayer, you must meet all of the following requirements.....c.If you were married at the end of 2018, generally you must file a joint return[emphasis mine]. However, filing a separate return from your spouse will not disqualify you from being an applicable taxpayer if you meet certain requirements described under Married taxpayers, later.(page 3)"

And what are the "certain requirements"? They are listed on page 5 under "Married Taxpayers". Basically, you have to satisfy either "Exception 1—Certain married persons living apart" or "Exception 2—Victim of domestic abuse or spousal abandonment." Most taxpayers don't meet either exception. What is clear is that you just can't choose to file separately in order to try to take the PTC.

Do either of these exceptions apply to you?