How to Split 1095-A when father HOH paid for Covered CA for himself + 2 kids but he only gets 1 kid as his dependent.

[Turtle43]

Father and Mother going thru divorce, they have been filing separate tax returns 2015 and 2016. Father taking the son and mother taking the daughter as dependent.  Father bought Covered CA Health Insurance for himself and 2 kids and he qualified for Premium Tax Credit. Father has a lot less income.  I noticed he is getting about $8K PTC refunded and that is due to household of 3 but in reality he should only be household of 2.  

Question 1: Do I try to split the 1095-A and take only 2/3 for Father's tax return?  I don't need to actually figure out the premium split between each person (father more expensive than children).   

Question 2: Then in Mother's tax return, enter the 1095-A for 1/3? I am not sure how this part will work yet because her name is not in the 1095-A. Mother's income is too high for her to get Premium Tax Credit.  

Father is covering insurance for both children because he is worried Mother will drop the ball and forget to have insurance for the daughter. I am doing both tax returns at this time and hoping to retire from doing Mothers after 2017.

[TaxGuyBill · Accepted solution]

Will the parents agree how to split it?  If so, the father can claim 100% and the mother can claim 0% (but you still need to fill out the allocation sections).  If they can't agree, yes, in the Allocation section, you need to enter 0.67 on the father's return and 0.33 on the mother's return.

The 8962 will still show a Household Size of two for the father, so Premium Tax Credit factors that in.

For the future healthcare applications, the father is required to tell the Marketplace that he will not be claiming one of the kids (if that will continue to be the case).  The kid will then receive their own 1095-A.

You said "because he is worried Mother will drop the ball and forget to have insurance for the daughter".   Does the mother also have insurance on the kids?  In other words, are the kids double-covered (or eligible for insurance through an employer)?  If so, you need to change the SLCSP in column B of the 1095-A.

[Turtle43]

Thank you so much, TaxGuyBill!  Father and Mother are not talking to each other much in the nasty divorce and Father will definitely not let Mother take any PTC as he paid 100% for it (although I actually don't know the details of the Child Support agreement and the divorce is not finalized). Thanks for letting me know Father can actually claim 100% but I have to input the 1095-A allocation in Mother's tax return as well. Trying not to get letters from IRS.

Mother is not as organized and Father doesn't want his daughter to go without health insurance. Mother only has coverage for herself. Kids are not double-covered.

Both Mother and Father are self-employed so buy individual insurance through the Exchange (Father) or Off-Exchange (Mother). I had to help Mother straightened her situation. In 2016, she was partially in the same 1095-A until Father kicked Mother out of the plan.

[TaxGuyBill]

Make sure Mother agrees to let Father claim 100%.

By default (no agreement), the mother would claim 33%.

However, if there was Advance credit (column C of the 1095-A) that would mean she would need to PAY part of it back.  If there was not any Advance credit, she could want to be spiteful and take the 33% just to not let Father have it, and there would be nothing the father could do about it (other than going to Family Court).

[Turtle43]

Thank you for the pointers. Yes, there is advance Premium Tax Credit and Father (being the lower income earner) is getting a few thousand $ refund because of PTC. I think I should get Mother to sign a doc attached to both Father and Mother Tax Returns to the effect that Father will take 100% PTC Allocation for Credit.  Father is asking, if he should get Mother to pay for the daughter's share of health insurance cost? So inistead of Mother Paying for daughter's premium, perhaps Mother can just have 0% claim to PTC.  

Yes, due to her higher income, she would have to pay back the PTC for her daughter.

[TaxGuyBill]

There is no need to attach anything to the tax returns, but it would be a good idea for you and the father to keep a copy of something that says the mother is allowing father to claim 100%.

As for the father asking if mother should pay for insurance, that is what divorce attorneys are for.   

[Turtle43]

I was able to get Mother to sign that she is claiming 0% on her daughter's (her dependent) health insurance premium tax credit in Father's tax return Form 8965. Yay!  Good idea that I don't really need to attach to Father's tax return.  I will give him a copy for his record.

[jim cpa nj]

I have a couple filing separately that received the PTC. When I did the allocation the result was no different, as the software says MFS are not allowed to receive the PTC. They have to pay back the max of $650 each.