The IRS has issued final regulations that govern the relief available to victims of domestic violence or the waiver of the requirement that married taxpayers must file joint tax returns to be eligible for Sec. 36B premium tax credit (TD 9822). The regulations also specify how independent taxpayers who qualify for a deduction under Sec. 162 (l) for their health insurance premiums should calculate their Sec. 36B premium tax credit. The final regulations remove the temporary regulations that were published in 2014.
Victims of domestic violence
Under the regulations, a married taxpayer who is abused or has been abandoned meets Sec. 36B (c) (1) joint declaration obligation if the taxpayer files separately using married status, provided that the taxpayer (1) is living apart from his or her spouse at the time the taxpayer files the tax return, (2) is unable to file a joint return because the taxpayer is the victim of domestic violence or spousal abandonment, and (3) certifies on the tax return as required on the relevant forms and instructions that the taxpayer meets these criteria for claim a premium tax credit using a separately filed marriage status statement. Taxpayers may not receive relief from the joint reporting requirement for more than three consecutive years.
The IRS received many comments on these requirements when they were published as temporary and proposed regulations, but adopted them without substantive change. Several commentators questioned the three-year limit on relief, but the IRS said three years was enough time and its data indicated that most taxpayers only needed the relief for one year.
The regulation explains how to determine if a taxpayer has been abandoned by his spouse, which requires a taxpayer to establish that he is unable to locate the spouse after due diligence. They also provide for reconciliation rules for advance payments of the premium tax credit.
Second. 36B (f) (1) requires taxpayers who receive premium credit advance payments to file an income tax return and reconcile the credit advance payments with the premium tax credit the taxpayer is allowed for in year d ‘taxation. The taxpayer’s income tax liability is increased by the amount that the advance payments of the credit for the tax year exceed the premium tax credit allowed for the tax year, subject to the reimbursement limitations provided for in Sec. 36B (f) (2) (B).
For the purpose of determining Sec. 36B (f) (2) (B) limitation of additional tax, Temp. Reg. Second. 1.36B-4T (a) (3) (iii) (C) provided a special formula for calculating the household income of self-employed taxpayers who claim Sec. Deduction 162 (l) for health insurance premiums paid. However, the IRS discovered that this limitation amount inadvertently omitted a rule for situations in which Sec. The 162 (l) deduction should be limited to the income earned by the taxpayer from the trade or business for which the health insurance scheme is established. The final regulations have been amended to correct this oversight.
âSally Schreiber ([email protected]) is a Tax advisor senior editor.