How divorced parents who share one Marketplace plan each file Form 8962
A question from Reddit's r/tax: a mother and two children are on one Marketplace health plan. The parents are divorced; the mother claims one child as a dependent and the father claims the other. The mother paid the premiums. Does the father have to file Form 8962, will the IRS reject his return if a child's Social Security number is on a Form 1095-A he does not report, and how does he file without affecting the mother's return? The short answer: both parents file Form 8962, and each one's Part IV points at the other.
At a glance
- Form Form 8962, Premium Tax Credit (PTC)
- Issued by Internal Revenue Service
- Situation One Marketplace policy, two tax families
- Where it goes Part IV, Allocation of Policy Amounts
-
Results
2 returns each with its own Form 8962
100% / 0% the split the parents agree on - Catalog forms Form 8962, Premium Tax Credit, Form 1095-A, Health Insurance Marketplace Statement
- Form categories Tax credit forms, Health insurance forms
The challenge
Form 8962 reconciles the advance payments of the premium tax credit (APTC) made during the year with the credit a household actually qualifies for. A tax family is the taxpayer and the people they claim, so here there are two: the mother with Child A, and the father with Child B.
When one policy covers people in two tax families, the amounts on its Form 1095-A have to be split between the two returns. For parents who did not divorce during the year, this is what the IRS instructions call Allocation Situation 4, a policy shared between two tax families.
The father's instinct was that he does not need the form because he paid nothing. But APTC was paid for Child B, who is in his tax family, and the IRS cross-checks the Form 1095-A against the returns that should report it. Paying the premiums does not decide who files.
The solution
Under the shared policy rules, the two parents may agree on any split of the policy amounts, 100% and 0% or 75% and 25%, as long as the two add up to 100%. If they do not agree, the amounts are split by the number of enrolled people in each tax family. Both returns answer Yes at line 9, "Are you allocating policy amounts with another taxpayer?", and go to Part IV.
The mother files Form 8962 because she received the Form 1095-A and APTC was paid on the policy. On line 30 of Part IV she enters the policy number from line 2 of the Form 1095-A, the father's Social Security number as the other taxpayer, and a 100% allocation, so all of the enrollment premiums, the second lowest cost silver plan (SLCSP) premium and the APTC are reconciled on her return.
The father files Form 8962 as well. On line 30 he enters the same policy number, the mother's Social Security number and a 0% allocation. The mother gives him a copy of her Form 1095-A, since it is issued to her and he needs its policy number and amounts. Tax software such as TurboTax and TaxSlayer Pro asks for the other taxpayer's Social Security number and the percentages for exactly this case.
To fill in the form itself, the Form 8962 page on Instafill.ai fills it online from the documents and details you give it, for you to check before filing.
The results
| Mother's return | Father's return | |
|---|---|---|
| Files Form 8962 | Yes: she received the Form 1095-A | Yes: APTC was paid for Child B |
| Part IV, other taxpayer's SSN | The father's | The mother's |
| Allocation of the policy | 100% | 0% |
| Form 1095-A | Her own | A copy from the mother |
The two returns together account for the whole policy, each naming the other, which is what the IRS matching expects. Without the father's Form 8962, Child B's coverage sits on a Form 1095-A that his return does not account for, and APTC that is not reconciled risks being taken back.
Form 8962, Part IV
Form 8962 is the IRS form for claiming the premium tax credit and reconciling it with the advance payments made during the year. It is attached to Form 1040, 1040-SR or 1040-NR.
Part IV, Allocation of Policy Amounts, has room for up to four shared policies, on lines 30 to 33. Each asks for the policy number from line 2 of the Form 1095-A, the other taxpayer's Social Security number, the first and last month of the allocation, and the premium, SLCSP and APTC percentages.
The IRS publishes the instructions for Form 8962, including the shared policy allocation rules, and the current Form 8962.
