Please help- Need advice on allocation percentages for shared Marketplace coverage

Pam2026
Pam2026 Member Posts: 2 Newcomer
in Filing my taxes

My ex-husband enrolled our son in a Marketplace health plan for 2025 (our divorce decree states he should provide health coverage) and he did receive advanced payment of the premium Tax Credit.

I input the 1095-A form and run the numbers allocating different percentages. When I allocated 100% to me, it took out about $3,000 from my refund, making it negative. When I allocated 0%, it didn't alter my refund but at the time I tried to file electronically, I hit a system error stating: "The irs won't allow returns to be e-filed that have no premiums, slcsp amounts, or advance payment amounts on form 1095-a after any shared allocations."

Can someone please advise on what's a fair allocation percentage? My ex is in charge of paying for health coverage for our son, but it looks like I'll have to repay the credit he was given if I allocate any percentage but zero. On the other hand, if I allocate zero and mail my paperwork, I'm afraid it could be rejected.

This is my first time dealing with this issue, any advice will be greatly appreciated.

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Answers

  • Henry
    Henry FreeTaxUSA Agent Posts: 140 image
    Hi Pam2026, because advance premium tax credit was paid on the policy, the IRS instructions say you and your ex-husband are free to agree on any percentage allocation, as long as they combine to be 100%. You must use the same percentage consistently for the premiums, SLCSP, and APTC. It's fine for you to claim 0% and your ex-husband to claim 100% of the amounts.

    If you cannot agree on a percentage, the IRS provides a default formula: your allocation percentage equals the number of individuals enrolled in the policy who are in your tax family, divided by the total number of individuals enrolled in the policy. So if your ex-husband and your son are both on the policy and only your son is in your tax family, that would be 1 divided by 2, or 50%.

    The most important step here is to coordinate with your ex-husband so that your two returns use matching, complementary percentages. The IRS instructions for Form 8962 have detailed examples that walk through exactly this type of divorced-parent scenario, which you can find here: https://www.irs.gov/instructions/i8962

    Regarding the e-file error you received: the IRS will not accept a return through e-file where you've indicated a shared allocation but entered 0% for all amounts. In this situation, you may need to file by mail this year instead. The IRS doesn't reject mailed returns.
  • Pam2026
    Pam2026 Member Posts: 2 Newcomer

    Henry, Thank You so much for your detailed answer!

    I did allocate 0% to myself and tried using Turbo Tax to see if it would send me the same error and it didn't, so I was able to e-file through them (I had to pay).

    Thanks again!

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