[Bourne]

Theoretically speaking; let’s say a parent has claimed their child in all previous years. This year, the child is 20 years old and had no income, not in college, lived with taxpayer all year, taxpayer provided all support. Also, the child did not have insurance all year long. What are the risks for the taxpayer to not claim the dependent at all this year, and the dependent not file a tax return due to obviously having no income?

I’m in a debate and need opinions.

[Recked]

I assume you do not want to claim due to health ins penalty.
There is no risk is NOT claiming a dependent.
I've had many tax returns where we opted not to claim an unemployed +18 “child” because it would have cost more than any potential tax savings.
The health penalty and reward for a dependent as very much inverse as the earner's income goes higher.

No red flags for dropping the kid off the parents return.

Did they file for or qualify for an exemption from coverage?

[Bourne]

Correct, no file due to healthcare penalty. They did not file for an exemption, as the taxpayer has two other dependents that did have coverage, the third was just not covered (money issue I assume)

[Recked]

Kick em off the return.
There is no requirement for the kid to file and pay the mandate that I am aware of, but… not filing might cause an issue with trying to get on a health exchange in 2019, if the health exchange even exists.
I would think the kid would qualify for free coverage due to income under either the state exchange, or medicaid.

If, and its a big IF, they came after the kid for failure to file it would be what 695 bucks? And to my knowledge the enforcement measures for the penalty/mandate are going away 1/1/19. Its not worth their time to pursue a broke kid for 695 bucks, and I doubt they will have the funds to pursue collection next year anyway.

The kid isn't your client anyway. I would lose 0 sleep over not claiming that kid.

[Bourne]

My recommendation also. Thanks Recked. Good luck with BEC! Just saw the big 96 on REG, congrats!

[Recked]

Many thanks. 2nd weekend I have taken off in February in probably 13 or 14 years.
Feels good to make myself the priority.

Taken off is also relative, as I am focusing on studying.
Upward and onward.

[Author]

Replies