In Uncategorized on 03/23/2018 at 17:25

Lose Your Advanced Premium Assistance Credit

Although damaged, the Patient Protection and Affordable Care Act drives on, and like Juggernaut’s Car of legend, runs over the unwary taxpayer-beneficiary. Here’s the story of Eliot M. Gray & Susan C. Gray, Docket No. 28011-16S, filed 3/23/18.

Eliot & Susan exchanged vows at midyear. By year’s-end, Susan, who had started the year with estimated income below the 400% of poverty line and $3K of advanced premium assistance credit, found herself in the happy position of having nearly double that income on her joint return with Eliot.

But she also has a deficiency, as the credit is wiped out.

Sue claims that only her prenuptial income should count, but Judge Buch gives IRS summary J for the whole shebang.

Judge Buch explains: “When a taxpayer marries during the year they can elect the alternative computation of additional tax liability. Under this computation each spouse individually computes the alternative premium assistance amounts for the time they were unmarried using one-half of the actual household income and their family size prior to the marriage. The taxpayers add the alternative premium assistance amounts from the time they were unmarried with the premium assistance amounts the taxpayers were entitled to when married to calculate the alternative marriage year credit. The alternative marriage-year credit is then reconciled with the actual credit received to determine if excess credit was paid on behalf of the taxpayer. Mr. and Mrs. Gray did not elect this alternative computation on their Form 8962.” Order, at p. 4. (Footnotes omitted, but they cite to the relevant regulations).

Eliot & Sue are apparently so far over the cut-off that this computation doesn’t help them.

And so it’s off to Chicago and Tango Charley Juliet, the Tax Court Judicial Conference. Watch this space.

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