Interesting health coverage situation

[kamckinley]

So one of my clients got married to a resident alien in 2013. Getting a SSN for her was very time consuming (she was here illegally) and per the client she was unable to get health coverage without an SSN.

One of the exceptions on Form 8965 is C - Living abroad or noncitizen. According to the instructions for 8965...

"The individual is a resident alien who is a citizen or national of a country with which the U.S. has an income tax treaty with an applicable nondiscrimination clause and who is a bona fide resident of a foreign country for an uninterrupted period that includes an entire tax year. You can claim the coverage exemption for the entire year. For more information, see Bona Fide Residence Test in Pub. 54."

Also...

"The individual is not a U.S. citizen, not a U.S. national, and not an individual lawfully present in the U.S. For more information about who is treated as lawfully present for purposes of this coverage exemption, visit healthcare.gov."

I guess my first question is since she married a US citizen in 2013, is she now lawfully present in the US? And if so, then she does not qualify for this exemption?

I just confirmed that the resident alien spouse received her SSN in May 2014 and became a legal resident of US in June 2014. No healthcare coverage until January 2015. If I'm reading the instructions correctly, she gets an exemption from Jan - May of 2014, but penalized for June through December 2014. Do you agree/disagree?

Any help with this one will be greatly appreciated. Thank you!

[kamckinley]

Just to clarify my question... I know that the penalty applies to the resident alien from June through December. At that point she was here legally, had an SSN, and there was no reason for her to not have health insurance at that point.

Where I'm confused is if she qualifies for the exemption before June. She was married to a US citizen and was in the US all year in 2014. Since she was married to a US citizen, does that mean she was "lawfully" here from Jan - May? And if so, then no exemption for the first half of the year?

If anyone can shed some light on this, I would be very grateful. Thank you!

[kamckinley]

Bumping this up in hopes that someone can help with this situation.

Just to summarize, client married her long time partner who was here in the US illegally (for 20 years!). They got married in 2013, the non-citizen received her SSN in May 2014.

Questions:

1. When is the non-citizen spouse considered to be here legally? When they got married or when she finally got her SSN?
2. If she was here legally starting with when they married, then does she owe the penalty for all of 2014? She didn't get health insurance until Jan 2015 when her spouse was able to add her to her insurance through work.

Thanks!

[kamckinley]

I think I may have (finally!) figured this out, but would like some confirmation if possible.

Per the IRS Q&A website on the individual mandate, question 11 says that "All U.S. citizens living in the United States are subject to the individual shared responsibility provision as are all permanent residents and all foreign nationals who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes."

Also, per IRS Publication 519, "You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for calendar year 2014 (January 1–December 31)."

The non-citizen wife has been in the US for 20 years, so she definitely meets the substantial presence test. Since by definition, she is a resident alien if she meets the substantial presence test, then she is subject to the individual shared responsibility and does not qualify for the C - Living abroad or noncitizen exemption.

Does this sound right? Originally I thought she qualified for the noncitizen exemption before she was able to get her SSN, but after reading the Q&A on the individual mandate, it looks like she is considered a resident alien for tax and ACA purposes.

If anyone can confirm or clarify this I would appreciate it greatly. Thank you!

[TaxGuyBill]

As far as I know, getting married would not make her "lawfully present". I would THINK she would still need the documentation.

Yes, she is a "resident alien" BUT she was not "lawfully present". That means she DOES qualify for Exemption Code "C" while she was not "lawfully present".

Double check when she became "lawfully present". Can she get a Social Security number before she was "lawfully present"? I don't know, maybe.

If she didn't become "lawfully present" until June, she qualifies for Exemption Code "C" from January-May.