1095C AND 1095A with Premium Tax Credit

[mammondee]

I have a taxpayer who gave me a 2018 form 1095C with box 14 showing a code 1A. She also gave me a 1095A for 2018 showing over $3,000 in premium tax credits for the year. As the preparer, am I REQUIRED to disallow the premium tax credits because of that 1095C. I have checked, and the 1095C is coded correctly.

[TaxGuyBill]

I would first verify that the 1095-C is accurate (that the employer did offer coverage to employee and family). Then I would try to determine if the employer insurance is "affordable" (unless the taxpayer has losses on their tax return, it is almost always "affordable").

Otherwise, yes, you are required to disallow it. If you know that the taxpayer does not qualify for the Premium Tax Credit, why would you allow it on the tax return?

[mammondee]

Because I do not KNOW for sure that the code 1A in box 14 of a 1095C definitely disqualifies the taxpayer and his spouse from premium tax credits. If it does, I did not catch it last year when I filed their return. The husband had a 1095C box 14 code 1a, and the spouse had a 1095A with premium tax credits. Why on earth would the government allow this again unless it is admissible?

[TaxGuyBill]

Only the spouse has the 1095-A? Quite often, the spouse employer insurance is "unaffordable", which allows the credit.

It is your job to determine if the taxpayer qualifies for the Premium Tax Credit, which including asking about eligibility about other health insurance. Affordable employer insurance disqualifies it, affordable employer insurance does not.

https://www.irs.gov/pub/irs-pdf/i8965.pdf#page=8

[mammondee]

[QUOTE=TaxGuyBill;n296832]Only the spouse has the 1095-A? Quite often, the spouse employer insurance is "unaffordable", which allows the credit.

In 2017 the taxpayer had a 1095C with box 14 code of 1A. His spouse had a 1095-A with premium tax credits. Was the spouse entitled to those premium tax credits?

[TaxGuyBill]

[QUOTE=mammondee;n296836]

Only the spouse has the 1095-A? Quite often, the spouse employer insurance is "unaffordable", which allows the credit.

In 2017 the taxpayer had a 1095C with box 14 code of 1A. His spouse had a 1095-A with premium tax credits. Was the spouse entitled to those premium tax credits?

As I said before, no, UNLESS the employer insurance is considered "unaffordable" for the spouse. You need to find out the lowest cost of the employer plan that would cover the spouse, and determine if it is "affordable" or not. Very often the spousal insurance is considered "unafforable", but you need to find out the numbers and do the math.

[mammondee]

I am sorry, and I feel dense, but I thought the code 1A in itself makes it clear that affordable health care was offered to the employee, the spouse AND their dependents. That is why the employer does NOT have to fill out box 15 showing the employee required contribution each month.

[TaxGuyBill]

If you read the description of Code 1A again, it shows that (1) from the employer perspective (which may be different from the employee's situation), it is affordable to the employee and (2) health insurance was offered to spouse and dependents, regardless of affordability.

You need to run the numbers.

[Burke]

Affordable employer insurance disqualifies it, affordable employer insurance does not.

??? These two statements don't make sense.

[TaxGuyBill]

??? These two statements don't make sense.

Oops, the second part should have said UN-affordable employer insurance does not disqualify the Premium Tax Credit.