Can I Get the Premium Tax Credit If Married Filing Separately?

The Premium Tax Credit (PTC) is a refundable credit to help eligible individuals and families with low to moderate incomes afford health insurance purchased through the Health Insurance Marketplace. The amount of the credit is based on a sliding scale, meaning that individuals with lower incomes receive a larger credit. This assistance can be paid directly to the insurance company in advance to lower monthly payments or claimed in full when filing a tax return.

A taxpayer’s filing status is a category that defines the type of tax return they will use. For married individuals, the primary options are Married Filing Jointly (MFJ) and Married Filing Separately (MFS). This decision has significant implications for the types of tax deductions and credits a person can claim, directly impacting their overall tax liability.

The General Rule of Ineligibility

Generally, a taxpayer who is married and files their tax return with the Married Filing Separately (MFS) status is not eligible to claim the Premium Tax Credit. If a married person files a separate return, they are typically disqualified from receiving this assistance, regardless of their income level. This ineligibility applies both to claiming the credit on a year-end tax return and to receiving advance payments of the credit throughout the year.

The policy behind this regulation is based on the calculation of household income. The Premium Tax Credit is based on the total income of a household, which for a married couple, is considered to be their combined income. The joint filing requirement prevents couples from artificially lowering their individual incomes by filing separately to qualify for a larger credit than they would be entitled to based on their combined resources.

Individuals who anticipate needing to file separately should be aware that doing so will generally preclude them from accessing the PTC, a factor that can significantly alter the affordability of their health insurance plans.

Exceptions to the Ineligibility Rule

While the general rule disqualifies Married Filing Separately (MFS) filers from the Premium Tax Credit (PTC), the Internal Revenue Service (IRS) provides specific exceptions for certain taxpayers. The two primary exceptions are for victims of domestic abuse or spousal abandonment and for certain married individuals who live apart from their spouse. Meeting the detailed criteria for one of these exceptions allows an otherwise ineligible MFS filer to claim the PTC.

Domestic Abuse or Spousal Abandonment

A taxpayer may claim the PTC using the MFS filing status if they are a victim of domestic abuse or spousal abandonment. To qualify for this relief, the individual must meet a set of specific conditions. The taxpayer must be living apart from their spouse at the time they file their tax return and must be unable to file a joint return because of the domestic abuse or spousal abandonment.

The certification for this relief is made directly on the tax return. The taxpayer attests that they meet the criteria, but they are not required to submit third-party documentation with their return. It is important to note that this relief from the joint filing requirement is not indefinite; a taxpayer can claim the PTC under this exception for a maximum of three consecutive years.

This exception defines the household for PTC purposes differently. Instead of including the spouse, the household consists only of the filing taxpayer and any dependents they claim on their return. This allows for an accurate eligibility determination based on the income and family size of the filer who has separated from their abusive or abandoning spouse.

Certain Married Individuals Living Apart

A separate exception exists for married individuals who are not victims of abuse or abandonment but live apart from their spouse. This provision allows a taxpayer to be “considered unmarried” for tax purposes, including for PTC eligibility, if they meet three distinct tests. This exception is often aligned with the criteria for filing as Head of Household, though it applies for PTC purposes even if the taxpayer files as MFS.

The first test requires that the taxpayer live apart from their spouse for the last six months of the tax year. This means the spouses cannot have resided in the same household from July 1 through December 31. The second test is that the taxpayer must file a separate tax return. The third and final test involves dependents: the taxpayer must maintain a home that is the main home for a dependent child for more than half the year and must furnish over half the cost of keeping up that home.

All three of these conditions must be met for the taxpayer to qualify for this exception. This exception is intended for separated couples where one spouse has taken on the primary responsibility for a dependent child.

Information and Forms for Claiming the Credit

For a taxpayer who meets one of the exceptions and intends to claim the Premium Tax Credit (PTC) while filing separately, gathering the correct information and using the proper forms is required. The process centers on two key documents: Form 1095-A, Health Insurance Marketplace Statement, and Form 8962, Premium Tax Credit (PTC).

Required Information

The primary source of information for claiming the PTC is Form 1095-A, which is sent by the Health Insurance Marketplace to anyone who was enrolled in a plan through it. This form provides essential data needed to calculate the credit. It details the total monthly premiums for the enrolled plan, the premium amount for the applicable second-lowest cost silver plan (SLCSP), and the amount of any advance payments of the premium tax credit (APTC) that were paid on the taxpayer’s behalf. Taxpayers must have their Form 1095-A on hand before they can complete Form 8962.

Completing Form 8962

With the Form 1095-A information, the taxpayer can complete Form 8962. This form is filed with the tax return to calculate the amount of the PTC and reconcile it with any advance payments received. For a Married Filing Separately filer who qualifies for an exception, the taxpayer must check a box indicating they are eligible for an exception to the joint filing requirement.

This action serves as the official attestation required for the domestic abuse or spousal abandonment relief provision. The subsequent parts of Form 8962 guide the taxpayer through calculating their final credit using the monthly data from Form 1095-A and their household income.

Reconciling Advance Payments When Ineligible

Individuals who receive advance payments of the premium tax credit (APTC) during the year and ultimately file their tax return as Married Filing Separately (MFS) without qualifying for one of the specific exceptions are retroactively deemed ineligible for the PTC. This means they must repay the APTC that was paid to their insurer throughout the year.

The requirement to repay arises because eligibility for APTC is projected at the time of enrollment and is contingent upon meeting all criteria when the tax return is filed. A change in filing status from joint to separate without meeting an exception invalidates this eligibility. The total amount of APTC received during the year is reported on Form 1095-A and must be accounted for on Form 8962, where the repayment amount is calculated.

To mitigate the financial hardship of full repayment, the IRS has established repayment limitations. These limitations cap the amount of APTC that a taxpayer must pay back based on their household income as a percentage of the federal poverty line (FPL). For MFS filers, the repayment caps are less favorable than for other filing statuses. An MFS filer with household income below 200% of the FPL has their repayment limited to $375.

For those with income between 200% and 300% of the FPL, the limit is $950, and for those with income between 300% and 400% of the FPL, the limit is $1,600. An MFS filer with income at 400% or more of the poverty line is required to repay the full amount of APTC they received.