Is it mandatory to claim dependent

[Help123]

Parents filing MFJ received 1095B with their son on it. Son is 27 years old. Had no income in 2018. Son can be claimed as a dependent. Assume that ALL conditions are met for dependency.
Parents had insurance for 12 months. Son had insurance for 7 months. So there is a penalty on return because of son for $4,000.

Question: What if parent do not claim son as dependent and thus will not incur any penalty for insurance. Can you do that?
Son can file separate return with zero income.

Thank you.

[spanel]

**update.. your correct... $695 minimum, not max.

Why is there a $4000 penalty because son didnt have HI for 5 months???? Max penalty is 695? and it would be less than that. You need to mark who had insurance and for how long.....

Chris

[terryats]

I do not believe they have to claim their son, as he is an adult. A lot of high income taxpayers with kids in college with jobs don't claim them, so they can get the education credits. If the son did not have any income he is not required to file.

[Rapid Robert]

I do not believe they have to claim their son, as he is an adult. A lot of high income taxpayers with kids in college with jobs don't claim them, so they can get the education credits. If the son did not have any income he is not required to file.

Sorry to be blunt, but this is dead wrong. The tax household for purposes of ACA coverage mandate includes anyone who could be claimed as a dependent, whether actually claimed or not. It does not matter that the dependent did not have a filing requirement. (Think about it -- otherwise, under ACA, no parents would ever have to insure their kids, and obviously that is not the idea for how insurance works).

If it were a PTC (premium tax credit), there might be some opportunity to allocate, but you are talking about the SRP (shared responsibility payment), not a credit.

[Help123]

Why is there a $4000 penalty because son didnt have HI for 5 months???? Max penalty is 695? and it would be less than that. You need to mark who had insurance and for how long.....

Chris

Parent had high income and they had insurance for ALL 12 months. But son did not have for 5 months (Aug - Dec). Penalty = 2.5 percent of your yearly household income or $695 per person ($347.50 per child under 18), whichever is greater.

Should I mark two more months for GAP insurance allowance?

[Help123]

Sorry to be blunt, but this is dead wrong. The tax household for purposes of ACA coverage mandate includes anyone who could be claimed as a dependent, whether actually claimed or not. It does not matter that the dependent did not have a filing requirement. (Think about it -- otherwise, under ACA, no parents would ever have to insure their kids, and obviously that is not the idea for how insurance works).

If it were a PTC (premium tax credit), there might be some opportunity to allocate, but you are talking about the SRP (shared responsibility payment), not a credit.

Robert - I think you are right. There is only one 1095B with ALL three names on it. (Parents and Son)

[ATSMAN]

Are the parents getting a refund or is it a balance due return?

[Help123]

More info: Child was on parents insurance for 7 months (Jan - July 2018) and then he turned 26 in July 2018. Then he did not have insurance for rest of the year (Aug -Dec 2018).
Does this make any difference? Does child or parent get a break from penalty.

[dtlee]

Robert is correct. Your original question is not particularly clear. They do NOT have to claim their son as a dependent (and can forego the $500 credit). However that will not relieve them of the Shared Responsibility Payment.