Form 8962 - Allocation situation 4: Individuals who end up being members of two tax families

Derp

My ex and two of my children were on her HCA plan for the month of January 2025. For the rest of 2025, all of my children were transferred over to my HCA plan. Do we both need to fill out the Part IV allocation information or is it only my ex that needs to submit that information, since she is the one allocating the advance payment of the PTC?

Also, to make sure we have the percentages correct, my ex would be allocating 67% of the advance payment for January, right?

JanaA

Hello Derp! Yes, both you and your ex-spouse are required to complete Part IV on your own separate Form 8962 returns. Under Allocation Situation 4, each taxpayer enters the other person's SSN in column (b) and their own respective allocation percentage. So your ex would enter your SSN and her percentage, and you would enter her SSN and your percentage on your return. The two percentages must add up to 100%.

Regarding the 67% question, the exact percentage depends on how many individuals were enrolled in your ex's plan in January and how many of those belong to each tax family. The IRS default formula, when both parties cannot agree on a percentage, is: divide the number of individuals enrolled in the policy who are in your tax family by the total number of individuals enrolled in that policy. For example, if there were 3 people on the plan in January (your ex plus your 2 children) and your 2 children are in your tax family, your allocation percentage would be 2/3, or about 67%, and your ex's would be 1/3, or about 33%. If that matches your situation, then yes, 67% allocated to you (and 33% to your ex) would be correct. However, you and your ex can also agree on a different percentage as long as both returns reflect the same agreed-upon split.

Also keep in mind that since your children moved to your own plan starting in February, you will likely need to complete a separate Part IV allocation entry just for January (using the start and stop month columns), and then report your own plan's amounts for February through December separately.