Taxpayers who divorce or legally separate during the tax year but obtained minimum essential coverage through the Marketplace or a state health care exchange must complete Form 8962, Part IV, Shared Policy Allocation.
The taxpayer and their ex-spouse will ideally agree upon their individual allocation percentage, which be any percentage from 0% to 100%. The allocation percentages can be whatever they wish as long as they add up to 100%. Thereafter the taxpayer and the ex-spouse may use the percentage agreed upon for every month during which they had the policy, or the taxpayer and the ex-spouse may agree upon different percentages for different months. However, the taxpayer and the ex-spouse must use the same allocation percentage for all policy amounts (Enrollment Premiums, applicable Second Lowest Cost Silver Plan premiums, and Advanced Premium Tax Credit) for any given month.
If the taxpayer and the ex-spouse cannot agree on an allocation percentage, the allocation percentage is equal to the number of individuals for whom the taxpayer can claim a personal exemption for the tax year who were enrolled in the qualified health plan for which the taxpayer is allocating policy amounts, divided by the total number of individuals enrolled in the plan. The allocation percentage is the percentage that applies to the amounts the taxpayer must use to compute Premium Tax Credit and reconcile it with Advanced Premium Tax Credit. The former spouse must compute Premium Tax Credit and reconcile Advanced Premium Tax Credit using the remaining amounts.
To enter a Shared Policy Allocation into the program, from the Main Menu of the tax return (Form 1040) select:
- Payments, Estimates & EIC
- Premium Tax Credit (PTC)
- Allocating Policy Amounts With Another Taxpayer.
- Allocation of Policy Amounts, then Ok
- Allocation of Policy Amounts (Form 8962 – Part 4)
- Allocation #1 – Enter the Policy Number of the Shared Policy (if the policy number is greater than 15 digits, only enter the last 15 digits), the Social Security Number of the ex-spouse that the taxpayer is sharing the policy with, and the Allocation Start Month and Stop Month (using a two digit format for each month, for example January would be entered as 01). Next enter the taxpayer’s allocation percentage for the Premium, the Second Lowest Cost Silver Plan, and the PTC Advance Payment. This allocation percentage can range from zero through one hundred percent. After entering these numbers, select Ok to return to the Allocation Menu, then select Exit to return to the Form 8962 Menu.
- Enter Form 1095-A Amounts (Form 8962 Part 2) – Enter the calculated allocation amounts for the Premium, the Second Lowest Cost Silver Plan, and the Advance Payment of Premium Tax Credit. Calculate the amounts by taking the taxpayer’s allocation percentage for the Premium, the Second Lowest Cost Silver Plan, and the Advance Payment of Premium Tax Credit that was calculated using the criteria set forth above and multiply it by the amounts on Part III, Columns A, B, and C of Form 1095-A for each month that the taxpayer had the Shared Policy. The program does not automatically calculate these amounts. If there are multiple Shared Policies, the applicable amounts for each policy should be added together and entered on the appropriate month. Once all the amounts have been entered for each month that the taxpayer had minimum essential coverage through the Shared Policy, exit the menu.
If there is a Net Premium Tax Credit, this amount will be reflected as a Payment on Form 1040 and the taxpayer will receive the benefit of that amount. If the Advance Payment of Premium Tax Credit exceeds the amount that the taxpayer was entitled to receive, the Excess Advance Payment of Premium Tax will be reflected in the Taxes section of Form 1040 and the taxpayer will have to repay the excess advance payment on their tax return.
NOTE: This is a guide on entering Shared Policy Allocations into the Keystone Tax Solutions Pro program. This is not intended as tax advice.
Additional Information: