Premium Tax Credit

[Christian]

A client last year mistakenly enrolled her son as a dependent on the Healthcare Market Exchange. I told her she had made a mistake and if enrolling him for 2019 he would have to be enrolled as a single man as he is older than 18 and is not in school. He was 21 in 2018. I will be d----- if she did not go back and enroll him under her name for 2018. She herself is covered at work by the company policy for all 12 months. The Premium Tax Credit form shows his income of some $27,500 at 401% of poverty level disallowing the entire premium paid for his health coverage. Anyone have any suggestions? I am tempted to tell her to go to the local IRS office and plead her case. He owes some $3,300 back !!!

[Lynn EA USTCP in Louisiana]

Could he fund an IRA to get below the 401%?  Maybe borrow the $ from dear mom ?

 

[Christian]

Quite frankly Lynn I get soooooooooooooo exasperated by these folks like her I really am lost for words. Her excuse "I did it for financial reasons". This after I clearly explained she could NOT carry sonny as a dependent ANY LONGER ! She had already slipped by a year. I am going to direct her back to the exchange to see if there is any way to rectify this mess. There's this also to consider. If a dependent their combined family income will exceed $ 80,000 plus. Further how does play out as she is company insured. It is no wonder the hair on the rear of my head grows less each tax season ! 

[RitaB]

2 hours ago, Christian said:

 The Premium Tax Credit form shows his income of some $27,500 at 401% of poverty level disallowing the entire premium paid for his health coverage. Anyone have any suggestions?

$27,500 is only 228% of the poverty rate.

I think you'll be ok if you allocate the numbers on the 1095-A to the kid.  I had to do it last year with a mom and a [No Longer] dependent.  Well, I had to allocate 1% of the credit received to the mom and 99% to the kid because of something wonky with ATX, but I was able to allocate 100% of the other columns to kid.  It was torture, and I sat here for hours reading the Instructions to 8962.  There's a thread in the ACA Forum.  Hope this helps.

As far as mom being covered by ER, that's how my situation and yours are different, my mom had Marketplace insurance, so I may be missing something painfully obvious.   

[Gail in Virginia]

For insurance purposes, I don't think it matter whether the child(!) is your dependent or not.  I don't know why she is putting him down as a dependent for the Marketplace, but she can consider him a dependent for insurance purposes until he is 27 now.  If he is making too much for marketplace insurance, can she carry him on her policy at work?

[RitaB]

Yeah, I was thinking about this some more, and I think Christian has the box unchecked indicating that kid is claimed by parents.  His income is not over four times the poverty rate.  That's the opposite of how we used to handle the box, and is a bit awkward.  I think that's the problem.

[RitaB]

@Christian If your household size is zero on Line 1 of kid's Form 8962, you have the box unmarked on his 1040 Main Info tab, indicating that the parents are claiming the kid.  Dependents are not applicable taxpayers and pay back all Advanced Premium Tax Credit.  His income is not too high.

[Christian]

My thinking is he cannot be claimed a dependent on his mother's tax return as he is was 21 in 2018 and not a student. How can he be a dependent for purposes of the Health Market Insurance ? In looking at the Premium Tax Credit form I thought the 401% was clearly out of whack but the darn phone has been ringing off the hook so I have not had enough time to allocate to this problem just yet.

[Christian]

Maybe he can be considered her dependent for purposes of the ACA as he lives at home ?

[Christian]

HealthCare.gov advises she needs to reprocess his application for 2018. He will qualify for a credit on his income record. Needless to say I told her this last year. Of course, no man will tell you convincing a lady of the best course of action is always successful. 

[RitaB]

40 minutes ago, Christian said:

My thinking is he cannot be claimed a dependent on his mother's tax return as he is was 21 in 2018 and not a student. How can he be a dependent for purposes of the Health Market Insurance ?

You are correct, and he is not (because he earned over 4,150), but he will not have to repay the APTC.

 

[Christian]

I feel sure you are right. She says she is going to file his return herself leaving off the required PTC form not a great choice. I am going to attempt to talk her out of that but if she does it's her pertute.

[RitaB]

6 minutes ago, Christian said:

I feel sure you are right. She says she is going to file his return herself leaving off the required PTC form not a great choice. I am going to attempt to talk her out of that but if she does it's her pertute.

Charge her full return price when the letter comes:  "Where's your 8962?"

P. S.  I can't find the definition of pertute, I'd have to charge her for that, too.

[JohnH]

Rita:  I think that's the contraction for when you charge "per petute", so you had it right..

[Terry D EA]

I wonder if he meant per-too-tee. Like in its her ass if she doesn't. Hmmm

[Christian]

You are right it's her butt. Here's a new wrinkle. If you show the individual as a dependent on his own return the Form 8962 will populate correctly. If shown as a single person the 8962 sends you to the dependent info section. Something must be out of kilter in the program. Maybe I ought to call ATX.

[Christian]

GOOD GRIEF. I have made an error. If someone can claim you as a dependent DO NOT CHECK THIS BOX. I will let y'all guess who did NOT check the box.

[RitaB]

32 minutes ago, Christian said:

GOOD GRIEF. I have made an error. If someone can claim you as a dependent DO NOT CHECK THIS BOX. I will let y'all guess who did NOT check the box.

Yeah, and guess how many times I've done that...  so awkward.  I hate the forms soooo much...