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My family and I moved to the US, with a job, on May 21 of 2017. Since June of 2017, we have been covered by health assurance through my job. (the form 1095-B from Aetna informs 7 months of coverage).

Our (first) tax return was filed by our tax accountant with the full year health coverage box, on line 61, unchecked.

And this resulted in a penalty:

Our records show you have an unpaid shared responsibility payment for the tax year ending December 31, 2017. You owe this payment because one or more members of your tax household didn't have minimum essential health coverage. Your balance of $ X is due immediately. If you already paid your balance in full within the past 14 days or made payment arrangements, please disregard this notice.

Now my questions:

  1. In this situation of moving to the US as a nonresident alien in the middle of the year, did we have full health coverage for the year 2017?
  2. What can I do to fix it? Send a letter (what my tax accountant recommended me) proving I got here in the middle of the year and had coverage since then, or just submit a form 1040x with the line 61 checked?
  3. In my situation, would be more appropriated to file the tax return using the form 1040NR?

P.S.: I've explained my situation over a phone call and in an IRS office appointment, but they were not able to guide me in this situation.

  • A question just to clarify. When you say "June of this year" you mean June 2017? – mhoran_psprep Mar 11 at 12:50
  • exactly, June 2017 – Estevão Lucas Mar 11 at 13:51
  • Healthcare.gov is a good place to start looking for resolution. I couldn't find any exemptions from the 2017 mandatory coverage fee, but I also could not enter all your personal information (income etc.) Good luck! – GOATNine Mar 11 at 15:26
  • I tried that yesterday, without success. – Estevão Lucas Mar 11 at 17:09
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There are 2 questions here: 1) whether you were resident alien or nonresident alien for all of 2017, or dual status; and 2) how to deal with health insurance on your 2017 tax return.

Assuming you weren't in F or J status, you passed the Substantial Presence Test for 2017, and so you are a resident alien, but if you weren't a resident alien in years before that, the "First Year of Residency" rules apply, which makes you a resident only for the part of 2017 after you were first present in the US in 2017, and nonresident before, which makes you dual-status. Note that dual-status aliens cannot file as Married Filing Jointly, and cannot use the standard deduction.

If you were married, since you are resident at the end of 2017, you can use the Choosing Resident Alien Status (if your spouse was resident at the end of 2017) or Nonresident Spouse Treated as Resident (if your spouse wasn't resident at the end of 2017) election to make both you and your spouse resident aliens for all of 2017, and you guys would have to file as Married Filing Jointly. So assuming you were married, depending on whether you choose this, you are either dual status for 2017, or a resident alien for all of 2017.

Regarding reporting your health insurance coverage, I believe it was incorrect to check the box saying you had health insurance the whole year. Rather, you should have filed Form 8965 reporting an exemption from the penalty for the months you didn't have coverage. If you look at Form 8965 instructions, included in exemption code C, is nonresident aliens, including dual-status aliens in the first year of residency (and also including nonresident or dual-status aliens who were treated as resident the whole year to file a joint return with a resident spouse). So that exemption should apply for the first few months of 2017 before you came to the US.

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