8962 PTC Alternate Calculation

[jhbvtacpa]

First one of these I've had to deal with

Husband had Covered California entire year, little income and was given $5493 in premium credit

Wife had workplace coverage entire year and had significant income

How do I correctly allocate the coverage so the couple is not hit with a huge repayment penalty?

[TaxGuyBill]

Are you saying they got married in 2023?

Any kids or other people on the tax return?

On the 8962, fill in the month in Part II, Box A.  Then scroll down to Part V to fill that in

Unfortunately, the Alternative Calculation often does not reduce the repayment.  But it varies, depending on the circumstances (if the wife's income was very high, it likely won't reduce the repayment).

[jhbvtacpa]

Thanks for the quick reply TGB,

Crazy that they have to pay a huge penalty for two months of marriage

Couple was married in October, 2023

No kids or other people

She made $135k in TY2023. 

He made $36k net (self-employed) in TY2022 and will probably make the same for TY2023.

All is good until I get to Part V

Can't seem to get the Alternative Family size for each (has to be 1 or 2) and start month (October) & end month (December) to jive

[TaxGuyBill]

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@jhbvtacpa wrote:

All is good until I get to Part V

Can't seem to get the Alternative Family size for each (has to be 1 or 2) and start month (October) & end month (December) to jive

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Confirm that line 1 of 8962 shows "2".

Each of the areas in Part V should show a family size of 1, and a start of 1 and end of 10 (assuming they had Marketplace insurance from January until at least October or later).

Is it giving you an error or something?

[jhbvtacpa]

Doesn't reduce the penalty one dime. What a horrible deal for getting married late in the year.

[TaxGuyBill]

Consider MFS.

It disqualifies the credit, but if the husband's income is under 400% of the Federal Poverty Level, it will significantly reduce the repayment.