Client files MFJ. He had marketplace insurance with spouse and daughter in 2018. Daughter who is 26 and has job files separately and he does not claim her as dependent. He had advanced premium credit of 15,000 in 2018 which is all shown as a tax liability because his income is over the 401% threshold. He has rental income on property that is owned jointly by the daughter and father. Can he show the rental income on the daughter's tax return in order to reduce his income and hence be under the income threshold. Since daughter had insurance from the marketplace with the parents does she allocate the premiums and show the allocated premiums separately on her tax return. Or can the parents show all the premiums on their tax return?
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This sounds like shifting of income (on the tax returns) to obtain a favorable benefit they would otherwise not be entitled to. Has the rental property been reported 50/50 in the past or was the father reporting at 100%? Does he collect the income and pay the expenses? See my post earlier today which kind of addresses the same issue.......Last edited by Burke; 06-24-2019, 12:59 PM. -
1) Who received the rental income? Who paid for the rental expenses?
2) You said daughter was age 26. When did she turn 26? I'm not sure if she can be on the parent's policy after she turned age 26. Or did she receive a separate 1095-A?
3) You said daughter had a job. Does the job offer health insurance? If so, that usually affects the Premium Tax Credit (it essentially means her portion does not qualify for the credit).
4) Is daughter's MAGI under 400% of the Federal Poverty Level?
5) Are parents and daughter agreeable to adjusting things for the best OVERALL effect?
6) Have things been corrected with the Marketplace for 2019 (updating their current income and telling the Marketplace is NOT a dependent)?Comment
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1) 2018 was the first year of the rental. Parents received 70% of the income and expenses and daughter did 30%.
2) Daughter was 26 in 2018. Turned 27 in 2019
3) No insurance from the job
4) Daughters MAGI under 400%
5) Yes agreeable
6) 2019 yes corrected the MarketplaceComment
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