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IRS provides relief to married victims of domestic abuse claiming premium tax credit

March 27, 2014

In a Notice, IRS has provided that, for the 2014 tax year, taxpayers who are victims of domestic violence can satisfy the joint-filing requirement necessary to qualify for the premium tax credit with a married-filing-separate return. IRS indicated that this rule would be incorporated into forthcoming proposed regs.

Background. The Patient Protection and Affordable Care Act (PPACA, P.L. 111-148) and the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152)—collectively, the Affordable Care Act—provide a Code Sec. 36B credit that is designed to make health insurance affordable to individuals with modest incomes who are not eligible for other qualifying coverage, such as Medicare, or “affordable” employer-sponsored health insurance plans that provide “minimum value.” The credit applies for tax years ending after Dec. 31, 2013.

To be eligible for a premium tax credit, an individual must be an “applicable taxpayer,” which Code Sec. 36B(c)(1) defines as a taxpayer:


1. with household income for the taxable year between 100% and 400% of the federal poverty line (FPL) for the taxpayer’s family size;
2. who may not be claimed as a dependent by another taxpayer; and
3. who files a joint tax return if married (within the meaning of Code Sec. 7703, see below).


Code Sec. 7703 provides rules for determining whether a taxpayer is married for tax purposes, as well as provisions under which certain married taxpayers living apart are considered not married for purposes of the 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.

Issue. For victims of domestic abuse, contacting a spouse for purposes of filing a joint return may pose a risk of injury or trauma or, if the spouse is subject to a restraining order, may be legally prohibited. In addition, Code Sec. 7703(b), above, does not apply to many individuals who are victims of domestic abuse, such as those in situations where the abuse may have occurred in the last six months of the tax year, where the victim doesn’t have the financial means to furnish over half the cost of a household, or where the victim doesn’t have a dependent child.

IRS acknowledged this issue in the preamble to the final Code Sec. 36B regs, issued in June of 2012 (see Weekly Alert ¶  1  05/03/2012) and indicated that it would issue proposed regs addressing domestic abuse and similar circumstances that create obstacles to filing a joint return. IRS 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.

Rule for 2014. 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:


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).