Do US residents who are citizens of Mexico and have ITINs qualify for heallthcare exemption?

sdtax · ‎12-06-2019

Taxpayers are MFJ with 2 children, ages 11 & 8. Father is sole wage-earner, only one with W2, is covered by a health insurance plan through his employer. Family members are not listed on the 1095-B. Wife & 2 kids have ITINs. They are citizens of Mexico. They have been residents of US for 4.5 years. I'm not sure if Father is US Citizen, green card, or if that matters. If so, I can ask. In past years, H&R Block has taken exemption "C" for the wife and kids, but their explanation doesn't make sense, from what I've looked up. I'm not sure if they are here legally or illegally, for purposes of applying the exemption rules. Kids were not born here (not DACA or Dreamers?). Does having ITINs make them legal? Not sure which questions to ask them, without being insensitive. Not confident in Block's assessment, also not confident I understand the exemptions or have enough info to confidently put the "C" (or other) exemption on their tax return. Does anyone know what else I need to ask them, or has a stab at how they would be treated with regard to the exemption? Thank you!

TaxGuyBill · ‎12-06-2019

Unfortunately, I think you may to find out if they are in the US legally. No, having an ITIN does not necessarily mean they are in the US legally.

One thing you may want to try is to determine if they qualify for any other exemption, such as the 'not affordable' exemption.

Otherwise, you need to ask if they have any visas or Green Cards. If they don't have either, they would not be legal, and would therefore qualify for exemption code "C". Immediately before you ask, you may want to assure them that this is only for tax purposes, and that you have no connection with immigration, and that anything reported on the tax return does not automatically get reported to immigration (however, if immigration asks the IRS for specific information about a specific person, the IRS will give out that information).

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sdtax · ‎12-06-2019

Hi Bill. They definitely don't qualify for "not affordable" exemption. Which makes me wonder why they aren't covered under husband's employer policy. We are close to the border, so perhaps they get their medical care there. They wouldn't qualify for Medi-cal given hubby's current income. I don't believe Medi-cal provides any 1095 documents anyways. As mentioned, H&R Block has been filing them with a "C" exemption, but the notes they provide don't make a lot of sense to me. Almost makes it sound like they are nonresidents, living in Mexico, which they are not. They have been in the US for over 4 yrs. I will ask about the Visas or Green cards. They pretty much have to be here illegally to get the "C" exemption, right? I HATE this part of the job! Healthcare in tax returns. Not my business.

TaxGuyBill · ‎12-06-2019

If they had Medi-Cal, they would receive a 1095-B. However, although most places (especially States) issue the 1095s in January, the IRS extended the due date for that to March 4th. But as you said, they are not supposed to qualify for that. Even if they had Medi-Cal, they should NOT have any exemption code, as they have health insurance.

Yes, H&R Block was either treating them as Nonresident Aliens or as illegal aliens.

Yeah, I agree, it is crazy that they make tax preparers be the health insurance police.

sdtax · ‎12-06-2019

Thanks, Bill. I was not aware of the March deadline for the 1095-B. Or that Medi-cal even issues them. They told me they don't have insurance, only the working father does. So I'm going to have to assume that they (wife and kids) do NOT have health insurance. That's what they told me, and that's how they've been reporting it. I found out that they are ALL here on Visas - his is TN, theirs is TD. Not sure what that means, but tells me that they are here legally. Sooo... they should not have an exemption, from what I can tell... agreed? I guess I could ask what the cost would be to insure them, on the off-chance it exceeds the 8%-ish. He makes six figures, so I'm thinking likely not. But who knows, premiums are ridiculous!

sdtax · ‎12-06-2019

Actually, it looks like they do qualify for unaffordable. Even when I looked up "minimal essential coverage". He said it's about $1,200/mo. to cover them through ER. Same or more through the Marketplace. This is CA, of course. Only needs to be about $850/mo. to be unaffordable. Bingo!
"Affordable" Health care act, right?