1095A - Covered Individual is a Parent

[sharpcougar]

Not familiar with this so hoping for some education.

Married couple are covered by employer insurance. Mother in law has no insurance so daughter signed up her mom in a market place insurance. 

Mother in law has no income. Can she file a separate tax return so married couple do not have to be hit with the impact of PTC?

appreciate  your guidance.

[Just-Lisa-Now-]

If MIL has a 1095A in her SSN, she'll need to file a return, you can allocate 100% to the MIL...is the policy in daughters name?  Does MIL have any income?

[sharpcougar]

The recipients on 1095 were the married couple (but they already had insurance through their employer). Covered individual on 1095 was the mother in law.

MIL did not receive a 1095A. 

[TaxGuyBill]

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@sharpcougar wrote:

The recipients on 1095 were the married couple

MIL did not receive a 1095A. 

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It sounds like the mom is a dependent of the couple.  Is that right?  The rest of my comment assumes that the couple is eligible to claim mom as a dependent.

If the couple claims the in-law as a dependent, it goes on the couple's return.

If the couple chooses not claim her as a dependent (so nobody 'claims' her) , the 1095-A goes on on the tax return which had intended to claim her.  The fact the couple CAN claim her, the couple signed her up for insurance, and the couple set it up so the 1095-A is in their name STRONGLY indicates the intention was to claim the mom.  So it goes on the couple's tax return.

[sharpcougar]

Thank you for this.

These are new clients and they did not understand the ramifications. The couple can indeed claim her as a dependent as in prior years but given the negative impact of adding 1095A data, they don't want to claim her. But from your answer, it seems like the couple have no choice but to add the 1095A on their tax return and take the hit. 

This is tough but if it's the right way, then that's how I'll do it.

[TaxGuyBill]

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@sharpcougar wrote:

it seems like the couple have no choice but to add the 1095A on their tax return and take the hit. 

This is tough but if it's the right way, then that's how I'll do it.

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I don't view it as a "hit" because she never qualified for Advance credit in the first place.  It seems like your client did something incorrectly while applying for the health insurance.

As a side note, some employer plans have an option to cover a "dependent", even if the dependent is not a child.  So they may want to look into that possible option with their employer's insurance.