Question
Form 1095-A Shared Policy Allocation Loophole
I have a new client who’s previous accounting firm had allowed them a Shared Policy Allocation of 0% to Parents and 100% to the Nondependent Child:
2022 details:
- Covered Individuals: Parents & 2 Children (1 is a dependent and 1 nondependent)
- 1095-A issued to Parents
- Parents household income is above the 400% federal poverty line
- Parent would have had a large Excess Advance Premium Tax Credit Repayment due on their tax return if 100% was allocated to them; however, the preparer allocated 100% to the nondependent child and 0% to the parents. This created a PTC Credit on the nondependent tax return and ultimately a refund.
If I am reading the Instructions properly, it states that if both filers agree to a specific allocation, that is acceptable. The scenario above just seems too good to be true. A possible red flag? I am trying to determine if this is legal.
I really appreciate anyone's advice or suggestions on this. Thank you so much!
