1095-A and Married Filing Separately: What You Need to Know

Filing taxes as “Married Filing Separately” (MFS) complicates handling Form 1095-A, which reports Marketplace health insurance coverage. This form is crucial for reconciling any Advance Premium Tax Credits (APTC) received and ensuring accurate tax reporting. Errors can lead to unexpected tax liabilities or lost credits.

When spouses file separately but share a 1095-A, they must allocate amounts correctly to avoid IRS scrutiny. Understanding how to divide the reported figures is essential.

Premium Tax Credit Restrictions with MFS

Married couples filing separately generally cannot claim the Premium Tax Credit (PTC), which helps lower Marketplace health insurance costs. Only those filing as “Married Filing Jointly” (MFJ), single, head of household, or qualifying widow(er) are eligible. This rule prevents misuse and ensures fair distribution of benefits.

Exceptions exist for victims of domestic abuse or spousal abandonment. A taxpayer who has not lived with their spouse for the last six months of the tax year and indicates they cannot file jointly due to these circumstances may still qualify. This exception provides financial relief for those unable to file jointly.

Without the PTC, MFS filers may face higher out-of-pocket health insurance costs. If APTC was applied to the policy, the IRS typically requires full repayment unless an exception applies, which can create a significant tax burden.

Sharing One 1095-A Across Two Returns

Spouses filing separately while covered under the same Marketplace plan must divide the information from Form 1095-A between their returns. The IRS does not allocate amounts automatically, so they must determine a reasonable split for total premiums, the Second Lowest Cost Silver Plan (SLCSP) benchmark, and any advance payments. Both must report the same percentages to avoid discrepancies that could trigger IRS scrutiny.

A 50/50 split is common but not required. The allocation can be based on actual contributions to premiums or another reasonable method, as long as the total across both returns equals 100%. Incorrect allocations can cause processing delays or audits.

Proper documentation is key. Both spouses should keep records of how they determined the split, such as bank statements showing premium payments or written agreements. If the IRS questions the reported amounts, clear evidence can help resolve disputes. Tax preparation software may prompt users to enter allocation percentages, but accuracy is ultimately the taxpayer’s responsibility.

Reconciling Advance Payments

Advance payments of the Premium Tax Credit (APTC) must be reconciled on the tax return. Taxpayers compare the total APTC listed on Form 1095-A with the actual PTC they qualify for based on final income. Any difference must be settled, which may result in additional tax liability or a refund adjustment.

Reconciliation is done on Form 8962, where taxpayers determine their final credit eligibility. If income was higher than estimated, they may have to repay part or all of the APTC received. If income was lower, they might qualify for additional credit, reducing their tax bill.

Repayment limits depend on income thresholds. For 2024 tax returns, those below 400% of the federal poverty level (FPL) have capped repayment amounts, while those above must repay the full excess credit.

Income changes during the year can create discrepancies in APTC amounts. Taxpayers who earned more than expected but did not update their Marketplace application may face a substantial repayment obligation. Reporting income changes promptly helps mitigate this risk. Those qualifying for repayment caps should review IRS guidelines to determine their obligations.

Household Size Adjustments in Tax Filing

Household size affects tax brackets, standard deductions, and credit eligibility. For MFS filers who previously shared a household, accurately reporting dependents is critical. The IRS defines household size based on financial support provided, including children, relatives, or other qualifying dependents. Misreporting this can lead to incorrect tax calculations and compliance issues.

Dependency claims can be contentious when both spouses attempt to claim the same dependent. The IRS applies tiebreaker rules: generally, the parent with whom the child lived most of the year has the primary claim. If custody is equal, the parent with the higher adjusted gross income (AGI) has the right to claim the dependent. These rules impact tax benefits such as the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC), which significantly affect tax liability.

Documenting Coverage Periods

Accurately reporting the coverage period ensures health insurance information aligns with IRS records. Form 1095-A lists the months of active coverage, along with premium amounts and any advance payments. Taxpayers must verify these details, as discrepancies can cause processing delays or IRS inquiries.

For MFS filers, coverage periods are especially important when allocating shared policy amounts. If one spouse was covered for only part of the year while the other maintained coverage longer, the allocation should reflect this. The IRS expects taxpayers to report only the months they were actually insured. If an error is found, such as an incorrect start or end date, taxpayers should request a corrected 1095-A before filing. Keeping documentation, such as insurance statements or Marketplace correspondence, helps resolve disputes.

Amending Allocation Errors

Errors in allocating Form 1095-A amounts can lead to misreported tax credits or unexpected repayment obligations. If a mistake is discovered after filing, an amended return may be necessary. The IRS allows corrections through Form 1040-X, but both spouses must ensure their returns reflect the same allocation percentages.

Before submitting an amendment, taxpayers should confirm the correct allocation method and verify that both returns match. If one spouse incorrectly claimed too much of the premium or APTC, the other may need to adjust their return as well. Failure to correct discrepancies could lead to IRS notices or audits. If an incorrect 1095-A was issued, requesting a revised form from the Marketplace is the first step before making any changes. Retaining prior tax returns and Marketplace records supports the amended filing.