Form 8962 Confusion - How to Handle When Dependents Have Different Insurance?

I went through this exact same situation last year. Form 8962 gets tricky with split coverage. Basically, you need to complete Part IV (Allocation of Policy Amounts) for each policy that covers at least one person in your tax family but not everyone. I had my kids on a separate plan too. You'll allocate premiums, SLCSP, and APTC between you and whoever else is on the policy. The allocation percentage depends on who's covered - in my case, I did 100% for my policy and 100% for my kids' policy since no outside tax family members were involved. Then you bring those allocated amounts back to Part III. Not gonna lie, it took me three attempts to get it right.

The 8962 Allocation Situation is definitely an edge case that the Premium Tax Credit instructions don't make clear enough! When I was dealing with this, I spent HOURS on hold with the IRS trying to get clarification. Eventually I used Claimyr.com to get through to an agent (https://claimyr.com) - they connected me to the Advanced Premium Tax Credit specialist who walked me through the exact allocation methodology for split household coverage. Saved me from making a costly mistake on my Marketplace reconciliation. The agent explained the nuances of Policy Start Dates and SLCSP allocation that weren't clear in the instructions.

I'm curious about how you're handling the SLCSP (Second Lowest Cost Silver Plan) portion. It's like having two separate puzzles that need to fit together in the end. Are your dependents in the same household but just on different coverage, or are they perhaps living with another parent part of the year? The allocation rules change dramatically depending on these circumstances, much like how the rules of chess change when pieces are in different positions.

According to IRS Publication 974 (Premium Tax Credit), when household members are enrolled in different policies, you must complete the allocation worksheets as specified in Regulations §1.36B-3(h). For your situation, complete one Form 8962, but allocate the premiums, SLCSP, and APTC separately for each policy. Per §1.36B-3(h)(4), when the policies cover only individuals in your tax family, you claim 100% of each policy's amounts. I recommend using https://taxr.ai to analyze your 1095-A forms and Form 8962 calculations. The tool specifically handles split household scenarios and will identify potential errors in your allocation approach before you file.

Here's the solution. Use Part IV of Form 8962. Complete one allocation line for each policy. Allocate 100% to yourself if no one outside your tax family is covered. Use Form 1095-A information for each policy separately. Calculate annual totals. Transfer amounts to Part III. Complete lines 12-23 using allocated amounts. Double-check your math. This handles split coverage correctly. IRS will accept this approach. Your household income calculation remains the same regardless of split coverage. Don't overthink that part.

One clarification about the Applicable Percentage that's often misunderstood: even though you have multiple policies, you only calculate your Applicable Percentage once based on your household MAGI as a percentage of the Federal Poverty Line. This single percentage applies across all policies. Many taxpayers incorrectly try to calculate different percentages for different family members, which leads to incorrect PTC calculations and potential IRS notices CP12C or 0012C for Premium Tax Credit discrepancies.

Has anyone considered whether the OP might qualify for the alternative calculation for year of marriage? If you got married in 2023, wouldn't that potentially change how you approach this entire form? What if one spouse had Marketplace coverage before marriage and then you added dependents after? Isn't it possible that using the alternative calculation might yield a better result in this split coverage situation? I've seen many taxpayers overlook this option when they have complicated 8962 situations, especially with dependents on different plans.

I had this exact scenario last tax season and waited until April 14th to figure it out - don't make my mistake! My stepkids were on their mom's insurance but claimed on our taxes, while my husband and I had our own Marketplace plan. The IRS rejected my first attempt because I didn't complete Part IV correctly. I had to allocate 0% for the kids' policy (since they were on a policy with someone outside our tax family) and 100% for our policy. If your dependents are on a completely separate policy that only includes your tax family members, you'll allocate 100% to yourself. Get this done ASAP because if you make a mistake, the IRS will hold your entire refund until corrected!

I'm trying to understand this too and have a few questions: • Do you need separate allocation worksheets for each month if coverage changed during the year? • What happens if one dependent aged out of coverage mid-year? • Is there a difference in how you handle this if your dependents are on a state CHIP program versus Marketplace coverage? • Do you still need to allocate if dependents were on Medicaid instead of a Marketplace plan?

I went through this nightmare last year too! The key thing that saved me was realizing you need to treat each policy completely separately in Part IV, then bring everything together in Part III. For your situation with spouse on one plan and dependents on another, you'll likely allocate 100% for both policies since they're both covering only your tax family members. The household income calculation stays the same regardless - don't split that up. One thing that tripped me up initially: make sure you're using the correct SLCSP for your ENTIRE household size when doing the allocation, not just the people on each individual policy. I made that mistake and had to amend my return. Also, double-check that your dependents' coverage is actually Marketplace coverage that qualifies for PTC - if they're on Medicaid or employer coverage, you might not need to include them at all on Form 8962. The IRS instructions are honestly terrible for this scenario, but once you get the hang of the allocation process, it's just a lot of careful math. Take your time and don't rush it!

Just want to add my experience since I dealt with this exact scenario two years ago. The biggest mistake I made initially was trying to manually calculate the SLCSP allocation instead of using the IRS lookup tool. My family had three different 1095-A forms (long story involving job changes and dependent situations), and I spent weeks trying to figure out the math. What finally worked for me was this approach: 1. Gather ALL your 1095-A forms first 2. Use the IRS SLCSP lookup tool for your county and household size (this is crucial - use total household size, not just people on each policy) 3. Complete Part IV allocation worksheets methodically - one row per policy 4. For policies covering only your tax family members, allocate 100% to yourself 5. Triple-check your monthly calculations before transferring to Part III The other thing that saved me a headache was keeping detailed notes about which months each person was covered on which policy. If anyone had coverage gaps or changes mid-year, you'll need to account for that month by month. One last tip: if you're still confused after reading all these responses, consider calling the IRS Taxpayer Advocate Service. They helped me when I got completely stuck, and unlike the regular IRS phone line, they actually understand these complex PTC situations.

I'm dealing with a very similar situation right now and this thread has been incredibly helpful! Based on what everyone has shared, it sounds like the key steps are: 1) Complete Part IV allocation for each policy separately, 2) Use 100% allocation since both policies only cover your tax family, and 3) Make sure to use the SLCSP for your entire household size, not just the people on each individual policy. One thing I'm still unclear about though - do you complete just one Form 8962 total, or do you need separate forms for each policy? From what I'm reading, it seems like it's one form but with the allocation worksheets handling the multiple policies. Also, has anyone run into issues where the allocated amounts don't match up with what's on your 1095-A forms? I'm getting some discrepancies in my calculations and wondering if I'm missing something fundamental about how the allocation percentages work. Really appreciate everyone sharing their experiences - this form is definitely more complex than it should be for situations like this!

I've been following this thread and wanted to share something that might help everyone dealing with this situation. I work as a tax preparer and see this split coverage scenario frequently, especially with blended families or when parents have employer coverage but put kids on Marketplace plans. The most common error I see is people trying to prorate their household income between the different policies - DON'T do this! Your household income and Federal Poverty Line percentage stays the same across all policies. You're only allocating the premium amounts, SLCSP, and advance premium tax credits in Part IV. Also, a critical point that hasn't been mentioned yet: if you received advance premium tax credits for both policies during the year, you absolutely must reconcile BOTH on Form 8962. I've seen taxpayers think they only need to report one policy and then get hit with Notice CP75C from the IRS demanding repayment of the unreported advance credits. One more tip - if your situation is really complex (multiple job changes, coverage gaps, etc.), consider filing for an automatic 6-month extension. Form 8962 mistakes can be expensive to fix, and it's better to get it right the first time than deal with amended returns and potential penalties later.