MFS with only one spouse ACA

[Pacun]

Wife has insurance through the exchange. Husband has it through employer. If they file separate, does husband have to include form 8962?

I just want to double check but I believe husband doesn't have to mention it on his 1040.

[kathyc2]

No, but the only way wife can claim PTC is if there is spousal abandonment or domestic abuse. 

[Pacun]

She will have to return some money.  Will that be OK?

[kathyc2]

She will have to pay full price and return all APTC.

[Lion EA]

Unless her income is low enough that there's a cap on her repayment.

[kathyc2]

4 minutes ago, Lion EA said:

Unless her income is low enough that there's a cap on her repayment.

That is not available for MFS.

[TexTaxToo]

5 hours ago, kathyc2 said:

That is not available for MFS.

According to the instructions for Form 8962, Line 28 (the cap on repayment):

Quote

If you were married at the end of 2024 but are filing separately from your spouse, the repayment limitations shown in Table 5 apply to you and your spouse separately based on the household income reported on each return.

So it would seem the cap is available if income reported is less than 400% of FPL.

[Lion EA]

I called it the wrong name; it's not a Cap. Form 8962 uses the name Repayment Limitation.

[kathyc2]

Whelp, I stand corrected.  Repayment Limitation does come into play if under 400%.

[Pacun]

When 8962 is involved, there are instances when MFS is more advantageous vs MFJ.

In this case I send husband MFS and still was rejected asking for form 8962. I don't have the time to see how allocation works (which I believe it is only in the year you get married) and lucky me, the wife called and said that they wanted to file jointly.

Good think I didn't send her return because her return would have been accepted since form 8962 would have been included.

[kathyc2]

Looking into it a bit more, it does appear that both need to file 8962 if MFS even though only one had coverage.  Both would be subject to repayment on their returns.  

I can't see how it could be allocated as only one had insurance.

If you have a situation with ACA where it's better to file MFS, I'd be interested in seeing numbers.

 

 

[Pacun]

7 hours ago, kathyc2 said:

Looking into it a bit more, it does appear that both need to file 8962 if MFS even though only one had coverage.  Both would be subject to repayment on their returns.  

I can't see how it could be allocated as only one had insurance.

If you have a situation with ACA where it's better to file MFS, I'd be interested in seeing numbers.

 

 

In the year you get married, let's say the ACA spouse earns income at 800% and the other spouse at 110%. They can split it at 50% each or whatever percentage they want.