Sigh, another one PTC issue

[Margaret CPA in OH]

Client is son of older clients.  He has lived with parents, sharing expenses, and daughter whom he claims, and filed as HOH meeting requirements as I see it.  For years he had adequate income but lost his job early 2024 making only $9000+ for the year.  He then had to get ACA coverage for himself and daughter.  But daughter/granddaughter qualifies as dependent for grandparents in 2024 due to support test.  Father/son does not qualify due to income. Daughter/granddaughter had been on Medicaid until mother let it lapse.  She went back on Medicaid in May 2024.

So we have a Form 1095A showing adult son with coverage the whole year and daughter coverage for 4 months. Since son/father is not claiming daughter for 2024 (didn't know that would be the outcome early in the year) , Form 8962 seems skewed as the listed amounts are higher for Jan-Apr for 2 people but the family size is 1 as daughter is not a dependent for the year.

This was originally rejected which is how I found out about the insurance issue.  Will it reject again with these weird numbers?  There is 0 tax effect as older parents paid full premiums so no PTC.  Dare I hope it will go through as is?

[kathyc2]

Maybe I'm reading something wrong here.  I'm understanding it to be:

GP's, son and baby lived together all year.  Son had 9K earned income, while GP's income was significantly higher.

GP's claimed baby for 2K CTC.  Son is filing single and not claiming baby.

If son claims baby he would have around 1K CTC as refundable and another 3K in EITC.  

While EITC and CTC can be split between parents, I don't think they can be split between GP and parent. 

 

 

[Margaret CPA in OH]

kathyc2, close.  GP claimed baby for CTC, met criteria. Son is filing single and not claiming baby because he did not provide for more than 50% of support, GP did. Child was a QC under GP.

I filed son earlier with 8962 with 632 in EIC.  When I tried son claiming baby, I could not get your results.  I think the GP 2KCTC and son's EIC of $632 can be used amongst the whole household. All returns have now been accepted.

2025 will be different as son has a very good paying job since January and is on a career path as a chef.  Whew!

Thanks for the clear listing of situations.  It was helpful.

[kathyc2]

28 minutes ago, Margaret CPA in OH said:

Son is filing single and not claiming baby because he did not provide for more than 50% of support, GP did. Child was a QC under GP.

Child is QC for both son and GP.  For qualifying relative (other dependent) the person claiming needs to provide more than 50% support. For QC the rule is child did not provide more than 1/2 of their own support.  

 

[TexTaxToo]

I agree with Kathy that it would have been better for the father to claim the child and get EITC for her.  It doesn't matter that the grandparents provided most of her support.  EITC+ACTC more than $4k.

If the GP claim the child, you have a shared policy situtation and the 1095-A is reported on both returns - see the instructions for Part IV of Form 8962 - they can allocate the premiums any way they want.  Was there APTC?   If there was I am surprised that the GP return was accepted without reconciling the 1095-A.

[GLJEANNE]

If there's no PTC to reconcile or claim, you don't need to file 8962. 

[Margaret CPA in OH]

There was PTC to reconcile. I tried to efile and it was rejected stating 8962 was needed as SSN was on record.  Client had to request a copy of 1095A.  When I entered the data, efile sailed through.  I will review the other recommendations about who gets what after the season but it will involve amending both GP and son returns and I don't have it in me just now.  I am also not convinced at the moment that it is the right way to go.  But I will definitely check it out.

[WITAXLADY]

right way? It is not about the GP and support, It is about the Parent and months lived

% of support would come into play, I believe if it was mom and dad deciding..

D

[Margaret CPA in OH]

That's why I will review and again go through the check boxes of support, etc.  GP essentially supported son and granddaughter all of 2024 due to son losing his job and earning only $9000.  GP provided housing, most of food with some cost sharing from son the entire year.  All lived together in the same house with son and granddaughter having exclusive use of 2 bedrooms and bath.