Victims Of Domestic Abuse Are Eligible For Exchange Premium Tax Credits: IRS

In Notice 2014-23, the Internal Revenue Service has released guidance on circumstances in which a married victim of domestic abuse who is unable to file a joint tax return may claim a premium tax credit under Code Sec. 36B for coverage under a qualified health plan.

Beginning in 2014, eligible individuals who purchase coverage under a qualified health plan through a health insurance exchange are allowed a premium tax credit under Code Sec. 36B. To be eligible for the credit, an individual: (1) must have household income for the tax year between 100 percent and 400 percent of the federal poverty line for the taxpayer’s family size; (2) may not be claimed as a dependent by another taxpayer; and (3) must file a joint tax return if married (within the meaning of Code Sec. 7703).

For victims of domestic abuse, contacting a spouse in order to file a joint tax return may pose a risk of injury or trauma or, if the spouse is subject to a restraining order, may be legally prohibited. Code Sec. 7703(b) allows certain married individuals to be considered not married for purposes of the Internal Revenue Code. Under Code Sec. 7703(b), a married taxpayer who lives apart from the taxpayer’s spouse for the last six months of the tax year is considered unmarried if he or she files a separate return, maintains as the taxpayer’s home a household that is also the principal place of abode of a dependent child for more than half the year, and furnishes over half the cost of the household during the tax year.

However, Code Sec. 7703(b) does not apply to many individuals who are victims of domestic abuse. Consequently, the preamble to final regulations under Code Sec. 36B, provided that regulations addressing domestic abuse and similar circumstances that create obstacles to filing a joint return would be proposed.

Under the new guidance, for calendar year 2014, a married taxpayer will satisfy the joint filing requirement of Code Sec. 36B(c)(1)(C) if the taxpayer files a 2014 tax return using a filing status of married filing separately and the taxpayer: (1) is living apart from the individual’s spouse at the time the taxpayer files his or her tax return; (2) is unable to file a joint return because the taxpayer is a victim of domestic abuse; and (3) indicates on his or her 2014 income tax return that the taxpayer meets the criteria under (1) and (2).

The proposed regulations will incorporate this rule for 2014.

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