FORM 8962

[ATX-THUY]

I filled out Form 1095-A with Shared Policy Allocation. Form 8962 is not generated on the return. When I pull the 8962, the advanced credit is calculated and reported on line 25. However, the excess advance premium tax credit repayment on line 29 is not calculated as it is supposed to. (Taxpayer is filing married jointly with AGI $103,452.)

[TaxGuyBill · Accepted solution]

Have you gone through the error-check, including checking the box that that taxpayer can NOT be claimed as a dependent?

What percentage are you claiming on the return?

[ATX-THUY]

As you said, I did not check the box to the taxpayer is not claimed as dependent on another's tax return.

After I checked the box, the repayment is calculated. By the way, the percentage is 33.

Thank you!

[TaxGuyBill]

You are welcome.

However, if all parties are agreeable to it, allocating 100% to one return usually has the best overall tax result, ESPECAILLY if it is all allocated to the one that has the lowest Poverty Percentage.  So you may want to keep that in mind to discuss with clients, at least for future tax returns.

[ATX-THUY]

Thanks for your note! I have reported same way as you mentioned. However, for this taxpayer that we are discussing, he is listed under parent's policy. The taxpayer filed his own return without reporting Form 1095-A information on his return. IRS sent him a letter requesting to show his share of the policy on the return. So I am allocating 33% to his return.

[TaxGuyBill]

Did parents already claim 67%?  Or did the parents claim 100%?  

You need to make sure that between the parents and your client, they TOTAL 100%.  You and/or the client need to find out what the parents did (and possibly discuss if the parents want to amend to change things).  Most likely it would be the best overall result to allocate 100% to your client (assuming he has the lower poverty percentage).

[ATX-THUY]

The policy lists three participants. The parents and the taxpayer. So I allocated 67% to the parents and 33% to the son. I amend the parent's return. Faxed the Form 8962 for the son to IRS. I think this should resolve the son's problem with the IRS.

Unfortunately, the son made too much money, he has to pay back his share of the advanced credit.

[TaxGuyBill]

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@ATX-THUY wrote:

Unfortunately, the son made too much money, he has to pay back his share of the advanced credit.

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That is why you need to ask all people on the 1095-A if they can agree to a different percentage.  It would have been better to allocate 100% to the parents and  0% to the son.

[ATX-THUY]

In the beginning, I allocated 100% to the parent. Then the son received IRS letter requesting him to file Form 8962 to report his share of the policy. The son does agree to report his share of 33% to resolve the issue.

His parent's return tax amount does not change much due to income, but they agree to split the policy.

Do you know if the IRS has record of split percentage of participants listed on Form 1095-A? Or does the policy specify the percentage of each participant?

[TaxGuyBill]

If they all agree, they can allocate it any way they want.   As I said before, it is best to allocate 100% to one tax return.

Do did you amend the parents to 67%?  If not, you have not resolved the issue, you are making  it worse by the kid claiming 33%.

[ATX-THUY]

Yes, I did amend the parent's return to make sure both returns are showing total 100% of the policy. The son is having full time job with high income, so he does not want to have issue with IRS.