The Internal Revenue Service is providing guidance for 2014 that will allow taxpayers who are the victims of domestic violence to satisfy a joint filing requirement with a married-filing-separate return in order to obtain the Affordable Care Act's premium tax credit.
Notice 2014-23 provides guidance on the circumstances in which a victim of domestic abuse who is married within the meaning of Section 7703 of the Tax Code and is unable to file a joint tax return may claim a premium tax credit under Section 36B.
Starting in 2014, eligible individuals who purchase coverage under a qualified health plan through an insurance exchange are allowed a premium tax credit. To be eligible for a premium tax credit, an individual must be an applicable taxpayer, but for victims of domestic abuse, the IRS noted that contacting a spouse for purposes of filing a joint tax return may pose a risk of injury or trauma or, if the spouse is subject to a restraining order, it may be legally prohibited. Section 7703(b) allows certain married individuals to be considered not married for purposes of the Tax Code. Under Section 7703(b), a married taxpayer who lives apart from the taxpayer’s spouse for the last six months of the taxable 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 thehousehold during the taxable year.
However, Section 7703(b) does not apply to many individuals who are victims of domestic abuse. For example, the abuse may have occurred in the last six months of the taxable year, the victim may not have the financial means to furnish over half the cost of a household, or the victim may not have a dependent child. Consequently, the preamble to the final regulations under Section 36B, which were issued in June 2012, provided that the Treasury and the IRS would propose regulations addressing domestic abuse and similar circumstances that create obstacles to filing a joint return. The regulations also requested comments on how to structure a rule to address such situations, including the types of documentation a taxpayer might provide to establish eligibility for the rule and the need for appropriate safeguards. The Treasury Department and the IRS said they have received numerous comments on this subject and intend to release proposed regulations addressing this issue.
For calendar year 2014, the IRS said a married taxpayer would be able to satisfy the joint filing requirement of Section 36B(c)(1)(C) if the taxpayer files a 2014 tax return using a filing status of married filing separately, and the taxpayer (i) is living apart from the individual’s spouse at the time the taxpayer files his or her tax return, (ii) is unable to file a joint return because the taxpayer is a victim of domestic abuse, and (iii) indicates on his or her 2014 income tax return in accordance with the relevant instructions that the taxpayer meets the criteria under (i) and (ii). The proposed regulations will incorporate this rule for 2014.