NECPA in NEBRASKA Posted March 6, 2015 Report Share Posted March 6, 2015 Sad story. Husband died in 2011 and wife is struggling financially. She has health insurance through her employer, but would not be able to get it for her 32 year old son and his friend that live with her. They have both lived with her for 18 months. The friend has no income and her son has $2,400. I don't know if it's worth it for her to claim them as dependents. The return just came in today, so I have not gone through the penalty form yet. She just wants to know if she should even bother trying to claim them. I know that on their own, they qualify for exemptions. Thanks. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted March 7, 2015 Report Share Posted March 7, 2015 Anyone who is claimed on a return as a dependent, must have insurance meaning the taxpayer has to provide the insurance or pay the penalty if they claim them. 1 Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 7, 2015 Report Share Posted March 7, 2015 Terry is correct and I believe it will be worth it for her to claim them depending on her income. For sure, she will benefit to claim her child because that will make her HOH. That's a given and a no brainer if she made more than $12K and she doesn't itemize deductions. So she will befit by claiming him as soon as she has 1K or more in taxable income. For the other person, if she provided more than 50% of his support and lived with her the whole 2014 (which you already said yes to both), you have to do the math. There must be an equilibrium based on her salary. I am tired right now but let's see if I can come up with a number. Let's say that she is HOH on the 25% bracket. So claiming him will save her about 1K. If on the other hand she is in a higher bracket, she could save about $1,500. So not claiming him will be a good idea only if she made more than $163K or if she only has 1K in taxable income which will mean she made little money. I am really tired today so help a dead horse, don't beat him if he made a math mistake from the top of his head. 1 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 7, 2015 Report Share Posted March 7, 2015 To file HOH, don't you need a qualifying child and not a qualifying relative? Doesn't her son fail the age test? Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 7, 2015 Report Share Posted March 7, 2015 To file HOH, don't you need a qualifying child and not a qualifying relative? Doesn't her son fail the age test? It can be a qualifying relative for HOH. 1 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 7, 2015 Report Share Posted March 7, 2015 Thanx, Judy. Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted March 7, 2015 Author Report Share Posted March 7, 2015 She should be in the 15% bracket. The head of household will help her for sure. I fell terrible for her, because her son's drug problem started after his dad died and she is just a wreck. That's the biggest problem with knowing my client's so well and so long. I was drained after she left, because I've known them since her son was young through church and other activities. Quote Link to comment Share on other sites More sharing options...
TAXMAN Posted March 7, 2015 Report Share Posted March 7, 2015 Based on the facts given have you calculated the penalty for not having that darn ins yet? Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted March 7, 2015 Author Report Share Posted March 7, 2015 I have not calculated the penalty yet. The return just came in today and I won't be working on it for awhile. I was just asking if they had to be insured. She had never even thought about taking them as dependents before today and sure as heck wasn't thinking about ever getting insurance for them. Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted March 8, 2015 Report Share Posted March 8, 2015 Do the son and his friend qualify for Medicaid? To avoid this conversation next year, can they get Medicaid for March forward so they have a less than 3 month coverage lapse in 2015? And if they don't qualify, is that because your state did not expand Medicaid? Quote Link to comment Share on other sites More sharing options...
Kea Posted March 8, 2015 Report Share Posted March 8, 2015 As I understand it, you have to have MEC for everyone in your "tax family." This means all dependents as well as anyone you are eligible to claim as a dependent (even if you don't). This is from the seminars I have taken. 3 Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted March 8, 2015 Report Share Posted March 8, 2015 If they are claimed as dependents and have no insurance, parents pay the penalty. If they are not claimed as dependents, then each one is subject to the penalty. This is not a hard question. Now as to whether it benefits the parents to claim them, that is an entire different discussion. Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted March 8, 2015 Author Report Share Posted March 8, 2015 Nebraska did not expand Medicaid. Both of the boys have addiction problems, so I doubt that they have even applied for anything. It may have been unaffordable for her, since she could not get them on her employer's insurance. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 9, 2015 Report Share Posted March 9, 2015 If they are claimed as dependents and have no insurance, parents pay the penalty. If they are not claimed as dependents, then each one is subject to the penalty. This is not a hard question. Now as to whether it benefits the parents to claim them, that is an entire different discussion. If the parent can claim the dependent but doesn't, they are still liable for the penalty. See below. From the instructions for Form 8965, under the definition for "tax household" it says: Tax household. For purposes of Form 8965, your tax household generally includes you, your spouse (if filing a joint return), and any individual you claim as a dependent on your tax return. It also generally includes each individual you can, but do not, claim as a dependent on your tax return. To find out if you can claim someone as your dependent, see Exemptions for Dependents in Pub. 501, Exemptions, Standard Deduction, and Filing Information, or Line 6c—Dependents in the instructions for Form 1040 or Form 1040A. However, an individual is included in your tax household in a month only if he or she is alive for the full month. Also, if you adopt a child during the year, the child is included in your tax household only for the full months that follow the month in which the adoption occurs. Dependents of more than one taxpayer. Your tax household does not include someone you can, but do not, claim as a dependent if the dependent is properly claimed on another taxpayer's return or can be claimed by a taxpayer with higher priority under the tie-breaker rules described in Pub. 501 1 Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 9, 2015 Report Share Posted March 9, 2015 If they are claimed as dependents and have no insurance, parents pay the penalty. If they are not claimed as dependents, then each one is subject to the penalty. This is not a hard question. Now as to whether it benefits the parents to claim them, that is an entire different discussion. Actually the parents will be hit with the penalty even if they don't claim their child. 1 Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted March 10, 2015 Author Report Share Posted March 10, 2015 Thanks, Judy. I have not heard anything back, so maybe she found out that they did have some income and she just did not know it. I already know more than I want to. Fortunately, they aren't my clients. If she has to pay the penalty, she will. Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 11, 2015 Report Share Posted March 11, 2015 Isn't that funny that if you have a 26 year old son who doesn't work, you support him 100%, you don't claim him on your taxes and YET you have to pay the penalty. After a second thought, it makes sense that if you have a child like that, you deserve some kind of penalty from the government. 2 Quote Link to comment Share on other sites More sharing options...
NECPA in NEBRASKA Posted March 11, 2015 Author Report Share Posted March 11, 2015 She called me yesterday. Her son had $5,600 in w-2 income, not under $3,950 as she had thought. The other guy goes to the court house every month to pick up a check for being shot. She doesn't even want to know about him being shot. I'm sure that she is sorry now that she even told me they were there. She does not know if his income is taxable. He has no address and changes burner phones every few weeks. I don't think that he would be living with me anymore, but what do I know? Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 12, 2015 Report Share Posted March 12, 2015 On your end, everything will be business as usual and she will file single. 1 Quote Link to comment Share on other sites More sharing options...
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