A USC lived in Canada Jan-May 2015 and qualified for and received OHIP and did not purchase US health care during that period. That USC lived in the USA June-Dec 2015 and obtained a non-marketplace health plan for which he was issued 1095-B
Is it legitimate for him to argue that it's as if he had full coverage for the entire year and report so on his 1040? Does anyone have any citations to back up that argument?
Taxpayer would say:
I fully concede that I was not granted a health coverage exemption for the five months that I was in Canada, but in fact I did have coverage, so while I can’t qualify for Form 8965 exemption Code C, can the IRS treat my Canadian health coverage the same as it would coverage obtained under a government sponsored program, coverage from an employer or coverage under certain plans that one buys in the individual market? If IRS could treat it the same, I would have minimum essential coverage for the entire 2015 year. My 1095-B evidences my minimum essential coverage from June-Dec 2015 while the Canadian health coverage was provided to me January-May 2015.
In other words, yes, we’ve ruled out him being able to claim the out-of-country residence, but IRS lets US residents claim coverage (not exemptions) via non-market plans, why can’t IRS let him claim Cdn OHIP just the same for the period of his Cdn residency!? After all, isn’t the idea that one needs health coverage, well, he had it. It's not about imposing a penalty on someone who didn’t obtain US health coverage when practically he didn’t need it. Is there a basis for IRS to penalize him just because his coverage was supplied by Canada - who doesn’t issue a Form 1095A, 1095B, or 1095C, that lists individuals in one's family who were enrolled in minimum essential coverage and shows their months of coverage.
Argue OHIP counts as a non-marketplace health plan?
Moderator: Mark T Serbinski CA CPA
Are you saying that your client lived in Canada for ONLY those 5 months? Or was he in Canada for an extended period INCLUDING those 5 months in 2015?
If the latter he may still qualify for the (c) exemption based on the PPT or bone fide exemption at least for those months. These exemptions do not have to be fulfilled over the entire year. The bone fide requirement for example can still apply if the taxpayer was out of US for ANY full calendar year (say 2014), not just the calendar year in question.
If it is the former, Provincial plans have not received approval as MEC's, so they don't qualify. Other countries have:
https://www.cms.gov/CCIIO/Programs-and- ... -04-16.pdf
If the latter he may still qualify for the (c) exemption based on the PPT or bone fide exemption at least for those months. These exemptions do not have to be fulfilled over the entire year. The bone fide requirement for example can still apply if the taxpayer was out of US for ANY full calendar year (say 2014), not just the calendar year in question.
If it is the former, Provincial plans have not received approval as MEC's, so they don't qualify. Other countries have:
https://www.cms.gov/CCIIO/Programs-and- ... -04-16.pdf
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
http://www.health.gov.on.ca/en/public/p ... ng_pd.aspx
So his argument that he was covered would not really be true.
So his argument that he was covered would not really be true.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Nelson - it's great that you challenge comments and don't just accept - because in doing so you've made me go back to recheck the facts and I had them wrong. Turns out, this US citizen taxpayer worked in Winnipeg full time for slightly more than 2 years and only left Winnipeg at the beginning of May, 2015 and has since been working in California. I am now going to revisit your previous comments toward seeing if there is a chance code c could be applicable to him in the way you described. Thanks.
Let's say this taxpayer did meet either the Physical Presence Test or the bona fide resident test by virtue of Canadian residence period leading up to May 2015 departure to USA, would such qualification be contingent upon having file Form 2555 in 2014 or other past year? [if yes, while I always thought the 2555 election must be timely filed to be effective, this week I came across IRS literature describing first electing it on an amended return filed after the due date].
On the 2015 1040 would it be necessary to file 2555 (which the taxpayer didn't do on his original return, he instead claimed FTC) in order to claim code c based on PPT or BFR?
While IRS clearly describes BFR as qualifying for code c (The individual is a U.S. citizen who is a bona fide resident of a foreign country for an entire tax year) can you please cite or link the source for same exception if qualifying only under PPT?
thanks!
On the 2015 1040 would it be necessary to file 2555 (which the taxpayer didn't do on his original return, he instead claimed FTC) in order to claim code c based on PPT or BFR?
While IRS clearly describes BFR as qualifying for code c (The individual is a U.S. citizen who is a bona fide resident of a foreign country for an entire tax year) can you please cite or link the source for same exception if qualifying only under PPT?
thanks!
Filing 2555 really doesn't have anything to do with 8965 -- just the TESTS are the same.
for EITHER 2555 OR 8965 filing purposes, He meets the bona fide residency test.
Once that test is met, the entire period of residency is eligible, not just the full calendar year in question. That is why, when someone moves out of US (say Jan 10th, 2015), it can take almost two years to qualify for BFRT (Dec 31, 2016) and would only be able to amend their 2015 return in Jan, 2017, to file 2555. It sometimes CANNOT be timely filed.
That was why I asked if he lived in Canada before, and questioned the claim that he was covered by OHIP (turns out is wasn't even OHIP?). Why would your client have lied to you about living in Canada only 5 months rather than at least 29 months?! Surely you weren't preparing his 2015 return without asking/getting his previous ones.
I wouldn't waste any time amending 2013/2014 return, and I would use 2555 or 1116 on his 2015 wages depending on which yields the lowest US tax, as customary. In either case exception (c) would apply for the first 5 months for 8965 purposes.
The ppt exception (which is not needed in this case, but is probably met as well) is listed right above the brt in the 8965 instructions regarding exemption (c):
https://www.irs.gov/pub/irs-pdf/i8965.pdf
Citizens living abroad and certain noncitizens—You were:
**A U.S. citizen or a resident alien who was physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months;
**A U.S. citizen who was a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year;
for EITHER 2555 OR 8965 filing purposes, He meets the bona fide residency test.
Once that test is met, the entire period of residency is eligible, not just the full calendar year in question. That is why, when someone moves out of US (say Jan 10th, 2015), it can take almost two years to qualify for BFRT (Dec 31, 2016) and would only be able to amend their 2015 return in Jan, 2017, to file 2555. It sometimes CANNOT be timely filed.
That was why I asked if he lived in Canada before, and questioned the claim that he was covered by OHIP (turns out is wasn't even OHIP?). Why would your client have lied to you about living in Canada only 5 months rather than at least 29 months?! Surely you weren't preparing his 2015 return without asking/getting his previous ones.
I wouldn't waste any time amending 2013/2014 return, and I would use 2555 or 1116 on his 2015 wages depending on which yields the lowest US tax, as customary. In either case exception (c) would apply for the first 5 months for 8965 purposes.
The ppt exception (which is not needed in this case, but is probably met as well) is listed right above the brt in the 8965 instructions regarding exemption (c):
https://www.irs.gov/pub/irs-pdf/i8965.pdf
Citizens living abroad and certain noncitizens—You were:
**A U.S. citizen or a resident alien who was physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months;
**A U.S. citizen who was a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year;
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
RE: Why would your client have lied to you about living in Canada only 5 months rather than at least 29 months?! Surely you weren't preparing his 2015 return without asking/getting his previous ones.
Client did not lie, wrote that he had been in Canada a couple of years; he's a doctor who works in medical research - a reputable professional. He moved and lost his tax records in his move and the most recent 1040 that he could locate and supply was 2012.
Client did not lie, wrote that he had been in Canada a couple of years; he's a doctor who works in medical research - a reputable professional. He moved and lost his tax records in his move and the most recent 1040 that he could locate and supply was 2012.