Covered CA & Tax Filing with Grad Student Son

[cali-freedom]

Hello! I'm looking for any feedback on my tax filing strategy for Ry 2023 and, subsequently, FY 2024 considering my son who started grad school in January 2023. He will turn 24 on 10/1/23. Effective 1/1/23, our son is part of our family health insurance plan through Covered CA. Based on our income, we qualified for a Silver 87 plan.

My wife and I will file jointly for 2023. Based on our research, our son qualifies as a dependent "Qualified Relative" rather than a "Qualified Child". He passes all of the tests for a Qualified Relative considering he's not a "qualified child", he is our son, we provide over 50% of his financial support, and he does not earn more than the max gross taxable income amount of $4,700.

If our assumptions are correct, we'll be able to file with our son as a "Qualified Relative" dependent. We can expect minimal surprises to our taxes considering our end of year income is very close to the expected income we stated at the beginning of 2023. Furthermore, we can use the same approach for 2024 considering our son will still be under 26 throughout 2024. In other words, he will be able to continue on our family healthcare plan next year.

Does Covered CA treat dependents who are "Qualified Relatives" or "Qualified Children" any differently?

Look forward to any feedback/guidance from tax or ACA experts. Thank you!

 

[cathy63]

In addition to the qualifications you mentioned, in order to be a Qualifying Relative he has to live with you for more than half the year including temporary absences such as school.

Assuming he's a U.S. citizen, you'll take the Credit for Other Dependents, which is worth $500. If you can itemize on Fed or state taxes, then you can use the portion of his (and your) insurance premiums that is not covered by the ACA subsidy as a medical expense deduction. You can also claim the Lifetime Learning Credit if you pay his college expenses and your AGI is less than $90K.

In California, you get an exemption for each dependent regardless of how they qualify. Last year it was $433 per dependent.

 

[cali-freedom]

Much thanks for info on the tax credits. I believe the requirement of living as a member of the household is not applicable considering our relationship as parent and son.

Would appreciate any additional feedback from the ACA/Covered CA perspective. Namely, can our son be on our family healthcare plan for FY 2023 and FY 2024. Also, does Covered CA treat "Qualified Relatives" any differently from "Qualified Children"?

Thanks again to cathy63.

 

[cathy63]

Much thanks for info on the tax credits. I believe the requirement of living as a member of the household is not applicable considering our relationship as parent and son.

Would appreciate any additional feedback from the ACA/Covered CA perspective. Namely, can our son be on our family healthcare plan for FY 2023 and FY 2024. Also, does Covered CA treat "Qualified Relatives" any differently from "Qualified Children"?

Thanks again to cathy63.

You are correct that he doesn't have to live with you in order to claim the $500 credit. Sorry for the error.

Regarding Covered CA -- your son can be on your health plan until he turns 26 whether or not he is your dependent on your tax return. There is no difference between Qualifying Relative and Qualifying Child for Covered CA (or any other state's ACA plan) because there is no dependency requirement in the ACA. It's purely an age requirement.