Moved to USA on 03/16 missed 2016 ACA enrollment. Can we mark option [x] Marketplace plans too expensive since our income was $26K/y?

[ssesteves]

We immigrated to the US on 03/16 and missed the 2016 ACA enrollment.

The plans at the marketplace all had monthly premiums of at least $1000.

When filling up the Healty Care portion of the tax return we see a few options to justify not having had healthcare on 2016. One of the options is

[x] Marketplace plans too expensive with tooltip explanation of (cost > 8% of household income considered too expensive) .

We qualify on that category since our yearly income was ~ $26,000.

Can we safely select this option and pick all months where "healthcare was too expensive", even the months we didn't live in the country? (if we leave these months unselected we are asked to pay for pro-rate penalty for them).

Thanks in advance
Sergio

[TaxGuyBill]

Are you a US citizen?
Was 3/16 the first time you were in the US?  If not, please give exact dates when you were in the US, and on what type of visa (if any).

[ssesteves]

Our son applied for our green card a few weeks after we arrived. We received the green card on May 2016. We've been here before as tourists for a short periods of time.

[TaxGuyBill · Accepted solution]

You are a "Dual Status Alien" in 2016.  That means you can check the box that you were a 'Resident of a Foriegn Country' to waive the penalty for the entire year of 2016.

If you do not have health insurance in 2017, you will be subject to the penalty unless you qualify for a different exemption.

However, TurboTax is not set up to do tax returns for a Dual Status Alien.  You do have the option to make the election to be treated as a Resident for the entire year.  TurboTax does not do that, you would need to manually do it and mail it with your tax return (it can not be e-filed through TurboTax).

https://www.irs.gov/publications/p519/ch01.html#en_US_2015_publink1000222177

However, being treated as a full-year Resident also means you would need to enter all of your Worldwide income, even before you came to the US.  If you do not want to do that, I would recommend going to a tax professional that is experienced with Nonresident Aliens.

http://taxexperts.naea.org/

[ssesteves]

Thanks a lot for your help!

We only have rental and retirement income and the $24K is the entire income for 2016 including the 3 months we were out of the country.

Please help me make sure I understand your answer. Based on your IRS link it looks like we can elect to be treated as a resident for the entire year. Are you saying we are not going to be able to use Turbo Tax to create our tax return?

We were hoping to be able to mark the [x] Resident of a Foreign Country and still be able to file the return through Turbo Tax.

[TaxGuyBill]

Yes, you can elect to be treated as full-year Resident.  If you do that, you CAN use TurboTax, BUT you need to manually fill out the election on a separate piece of paper and MAIL it with your tax return.  It can only be MAILED, it can not be sent to the IRS through the internet.

Yes, you can check the "Resident of a Foreign Country" and file through TurboTax.  However, as I mentioned before, you must MAIL your tax return, along with the election to be treated as a full-year Resident.