College dependent no minimum insurance

[cpabsd]

Who pays the penalty?  Parent or child?  My research says the parent is hit with this penalty.  

[jklcpa]

If the college student is a dependent on the parents return, then the parents will be responsible for the penalty.  Also, the student's MAGI will be included for purposes of calculating the penalty if the student was required to file a return.  Don't include student's MAGI if student files only to receive a refund of taxes withheld or estimated taxes paid.

[cpabsd]

Thank you Judy.  The student is not required to file, so no need to add to household income.  

[Terry D EA]

Thank you Judy.  The student is not required to file, so no need to add to household income.  

 Agreed, but... if the parents claimed him/her as a dependent then as Judy says, they get hit with the penalty.

[Pacun]

 Agreed, but... if the parents claimed him/her as a dependent then as Judy says, they get hit with the penalty.

 

I think whoever has the right to claim the exemption is hit with the insurance penalty whether or not they claim the child. This is funny... an example they put on the test is that the mother who signs the release form has to pay the penalty if the other parent decides not to claim the child. How can you calculate the penalty on a child that is not on your return?

 

I couldn't select exemption C on form 1095 for a client who was requesting an ITIN because they computer couldn't select it because it didn't have a social or ITI number. This person was a dependent on the return and I couldn't.. .how about a child that is not mentioned on the return?

Edited March 3, 2015 by Pacun

[jklcpa]

I think whoever has the right to claim the exemption is hit with the insurance penalty whether or not they claim the child. This is funny... an example they put on the test is that the mother who signs the release form has to pay the penalty if the other parent decides not to claim the child. How can you calculate the penalty on a child that is not on your return?

 

I couldn't select exemption C on form 1095 for a client who was requesting an ITIN because they computer couldn't select it because it didn't have a social or ITI number. This person was a dependent on the return and I couldn't.. .how about a child that is not mentioned on the return?

 

 

No, unless the instructions are wrong, I don't think what you are saying is true.  Pacun, do you have a cite for this?

From the instructions for Form 8965, under the definition for "tax household" it says: 

Tax household.

For purposes of Form 8965, your tax household generally includes you, your spouse (if filing a joint return), and any individual you claim as a dependent on your tax return. It also generally includes each individual you can, but do not, claim as a dependent on your tax return. To find out if you can claim someone as your dependent, see Exemptions for Dependents in Pub. 501, Exemptions, Standard Deduction, and Filing Information, or Line 6c—Dependents in the instructions for Form 1040 or Form 1040A.   However, an individual is included in your tax household in a month only if he or she is alive for the full month. Also, if you adopt a child during the year, the child is included in your tax household only for the full months that follow the month in which the adoption occurs.

 

But then it goes on to say this:

Dependents of more than one taxpayer.

Your tax household does not include someone you can, but do not, claim as a dependent if the dependent is properly claimed on another taxpayer's return or can be claimed by a taxpayer with higher priority under the tie-breaker rules described in Pub. 501

[Pacun]

No, unless the instructions are wrong, I don't think what you are saying is true.  Pacun, do you have a cite for this?

From the instructions for Form 8965, under the definition for "tax household" it says: 

Tax household.

For purposes of Form 8965, your tax household generally includes you, your spouse (if filing a joint return), and any individual you claim as a dependent on your tax return. It also generally includes each individual you can, but do not, claim as a dependent on your tax return. To find out if you can claim someone as your dependent, see Exemptions for Dependents in Pub. 501, Exemptions, Standard Deduction, and Filing Information, or Line 6c—Dependents in the instructions for Form 1040 or Form 1040A.   However, an individual is included in your tax household in a month only if he or she is alive for the full month. Also, if you adopt a child during the year, the child is included in your tax household only for the full months that follow the month in which the adoption occurs.

But then it goes on to say this:

Dependents of more than one taxpayer.

Your tax household does not include someone you can, but do not, claim as a dependent if the dependent is properly claimed on another taxpayer's return or can be claimed by a taxpayer with higher priority under the tie-breaker rules described in Pub. 501

We are saying exactly the same thing.

[jklcpa]

I think whoever has the right to claim the exemption is hit with the insurance penalty whether or not they claim the child. This is funny... an example they put on the test is that the mother who signs the release form has to pay the penalty if the other parent decides not to claim the child. How can you calculate the penalty on a child that is not on your return?

 

 

 

I see that but it could mislead some readers because of the way it was written.  Your first sentence sounded like the law, and it was only made correct and complete by taking the example into consideration as law also.

[TAXMAN]

Mom and Dad retired claiming their child (29) that lived there all year and Did not have any income. Mom and dad could not add child to their health ins since they have social security and a govt pension. Doe that mean that they have to pay the penalty for the child? By the way they live in Virginia which did not expand the medicare law. Please help me understand this.

[jklcpa]

Mom and Dad retired claiming their child (29) that lived there all year and Did not have any income. Mom and dad could not add child to their health ins since they have social security and a govt pension. Doe that mean that they have to pay the penalty for the child? By the way they live in Virginia which did not expand the medicare law. Please help me understand this.

 

If they can claim this person as a qualifying relative, they will owe the penalty for the 29 year old without insurance coverage unless they meet one of the exceptions.

[Gail in Virginia]

Virginia did not expand Medicaid, but if the unemployed child would have qualified for Medicaid in a state that expanded Medicaid, that IS an exception.  However, that is probably based on household income as well - so when you put this "child" on the parents' tax return, and look at the income for the entire household, would the uninsured person have qualified for medicaid?  I use ProSeries, and it automatically fills in that exception if the income is low enough to qualify.  I don't know if ATX does.

[TAXMAN]

Total income for Mom and Dad was about 70k from pensions so I don't think child in this case would have qualified for Medicaid. I was thinking that since VA did not expand could child have the exception?

[Jack from Ohio]

Total income for Mom and Dad was about 70k from pensions so I don't think child in this case would have qualified for Medicaid. I was thinking that since VA did not expand could child have the exception?

I am not aware of an exception for that.  Parents owe the penalty.

Edited March 6, 2015 by Jack from Ohio

[Terry D EA]

I think I have to agree with Jack. I've not heard of this exception either. Please post your source

[joanmcq]

The household would have had to qualify for Medicaid for the exception to apply. Parents owe the penalty. The kid would have qualified for a catastrophic plan because he is under age 30.

[TAXMAN]

Thanks all. I tried IRS srp worksheet on line it said did not owe I hand worked it said I did owe it. Just thought it was confusing.