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The insurance payments and advance PTC must be allocated on parents tax return.Then - the child will use allocated portion on his/her tax return.
Also whether the child is eligible for the PTC is determined on that tax return and advance PTC is re-conciliated.
The child may be eligible for PTC regardless if premiums were paid by parents.
I don't understand all that you are saying.
Also whether the child is eligible for the PTC is determined on that tax return and advance PTC is re-conciliated. - What do you mean by THAT return - (Parent's return or the Child's return??) I think you mean child, but not sure.
If the child files SEPARATE tax return - eligibility for for PTC is determined on the tax return which is prepared by the child.
Each taxpayer determines his/her own eligibility for PTC.
As parents receive 1095A which includes the child and for whatever reason - they do NOT claim the child as a dependent - parents file form 8962 Part IV Shared Policy Allocation
and calculate the amount ALLOCATED to the child.
The child will use these ALLOCATED amounts on his/her tax return - and will reconcile allocated advance PTC.
Rules for allocating are in IRS publication 974
So - first step - parents file their tax return - and allocate premiums and advance PTC to the child
Then - parents will determine their PTC eligibility and reconcile advance PTC allocated to them.
After that the child will be able to prepare his/her tax return - will determine PTC eligibility (regardless if premiums paid by parents - but will use amounts allocated to the child)
And finally - the child will reconcile advance PTC allocated to the child.
Is it required to allocate the PTC between the parents and the child or can the parent take all of the credit?
Parents may NOT claim PTC for the child if they do not claim that child as a dependent.
Regarding allocations - parents may choose to allocate 100% of premium and 100% of the advance PTC to themselves and correspondingly - allocate zero to the child - but that must be clearly indicated on form 8962 included with parent's tax return.
Lev, I haven't forgot about you.
I am still working this issue and may have more questions, that is why I am leaving it open