Question

Reconciling APTC/PTC when non-filing, non-dependent, adult child on parents' health care policy/1095-A

Forum|Forum|2 years ago
December 5, 2023
1 reply
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Would like some clarification re TurboTax advice regarding reconciling APTC/PTC (Advanced Premium Tax Credit/Premium Tax Credit) at https://ttlc.intuit.com/turbotax-support/en-us/help-article/taxation/parents-1095-form-return/L2phDGHT3_US_en_US?uid=lg2b7ppx. This is coming up for me a context where 1) parents list their adult child as a dependent on their ACA marketplace application for the coming year; 2) coverage and APTC is provided accordingly; 3) parents receive a 1095-A filled out accordingly (with numbers in all columns A-C); but 4) parents later discover their adult child did not qualify as their dependent for that tax year after all.

My confusion relates to the fact that all of the instructions/examples given on the TurboTax page cited above assume the dependent would otherwise be filing themselves. But what about situations where they wouldn’t otherwise be required to file? Looking at Example 4 from 26 CFR § 1.36B-4(a)(4) (and pp 12-13 of the Form 8962 instructions), it seems if the parents' adult child is not otherwise required to file for that tax year themselves (e.g., adult child didn't make enough) and does not in fact file themselves, and no other taxpayer can claim that adult child as a dependent for that tax year, the instructions given on the cited TurboTax page, regarding allocation by percentage (agreed upon or otherwise), are inapplicable. In those cases, in accordance with Example 4 from 26 CFR § 1.36B-4(a)(4) (and pp 12-13 of the Form 8962 instructions), the parent can (and I'm thinking must) alter/reduce their SLCSP and PTC #s (which they would have otherwise have put directly, as-is from their form 1095-A onto their Form 8952) to match what those numbers *would* have been (determined by using "applicable SLCSP premium tools," discussed on p 27 of Pub 974) if they had *not* included their non-dependent adult child as their dependent on their marketplace application.

Can someone with experience chime in on whether or not they see this the same way, and why or why not?

TurboTax Home & Biz Windows

B

Bsch4477

Employee

See if this helps.
https://ttlc.intuit.com/community/taxes/discussion/how-does-my-son-non-dependent-deal-with-healthcare-on-his-taxes-when-i-paid-for-his-coverage-through/00/130588/amp

T

tibbons2Author

Hi @Bsch4477,

Thanks so much for your reply. 🙂

I read through the page you linked. The trouble is, I'm not seeing anyone there is talking about situations where the non-dependent adult child wouldn't otherwise be required to file and doesn't want to file. I get that when they either want to file or are required to file, Allocation Situation # 4 applies, i.e., parents and child can agree to any allocation % they desire of the 1095-A #s as is (assuming no other errors on 1095-A #s).

However, when the non-dependent adult child isn't required to file and doesn't want to voluntarily file (and no other taxpayer can claim them as a dependent for that tax year) it would seem the parents can (and I’m thinking must) alter/reduce their SLCSP and PTC #s (which they would have otherwise have put directly, as-is from their form 1095-A onto their Form 8952) to match what those numbers *would* have been (determined by using "applicable SLCSP premium tools," discussed on p 27 of Pub 974) if they had *not* included their non-dependent adult child as their dependent on their marketplace application, in keeping with Example 4 from 26 CFR § 1.36B-4(a)(4) (and pp 12-13 of the Form 8962 instructions). After all, if Example 4 from 26 CFR § 1.36B-4(a)(4) doesn't apply in such a way in such situations, when/how would it ever apply?

Look forward to hearing any thoughts you (or anyone else) has on this.

Thanks. 🙂

B

Bsch4477

Employee

This discussion includes your situation. Although he does not have to file, he can file anyway, giving himself a dollar of interest to allow efiling and selecting zero percent of shared allocation.