Married Filing Separately w/marketplace insurance

[YLC]

My client wants to file Married Filing Separately this year, in the past she has filed jointly.  It always ended up with her covering his self-employment tax shortfall.  The issue I am struggling with is that they took out a joint marketplace insurance contract last year with advanced ptc.

How do I handle the insurance portion filing MFS?

Thank you

[TaxGuyBill · Accepted solution]

Enter the 1095-A on each return.  Go down to the "allocation" section and allocate 50% to each person (assuming both were covered on the 1095-A, or there is a covered dependent on the non-covered person's tax return).

Filing as MFS will disqualify the credit (except for domestic abuse or abandonment), so they will need to repay some (or all) of the Advance credit.

[qbteachmt]

"with her covering his self-employment tax shortfall"

Uh, what? Any payroll withholding is part of "their" tax payments. If they are not withholding enough + not also making estimates, then there is shortfall for Taxes, but it's not exclusive to any one tax type. And if there is a refund, is that only hers?

MFS is not the way to resolve a fight over whose money in a marriage is supposed to pay for which things.

And it seems they need some help with prepayment planning.

[YLC]

Thank you, extremely helpul!

[YLC]

I know everything to which you responded, but she can't make her husband make est taxes if he refuses, so she is sick of giving up her refund to cover his side.  I've explained all of the pitfalls of MFS but that is her choice, not mine.

[YLC]

I don't know if I replied to your solution, if I didn't, thank you.  Helped me resolve the situation with my client!

Yvonne

[sjrcpa]

Has she considered adjusting her withholding so there is no refund/to just cover the tax on her income?