Question: A client has a friend who is 40 years old, a dependent, on the client's tax return and a member of the household. The dependent does not have health insurance, is not a blood relative, completely unrelated and has no income. Is the taxpayer required to cover him or purchase health insurance for this dependent?
Answer: Even though the person is unrelated, if such person is a dependent as defined in §152, the taxpayer can be liable to cover such person for the year for health insurance unless the dependent is an exempt individual. This can be a problematic in finding a policy, if one exists, that covers unrelated individuals in the taxpayer’s household. The preambles to the regulations even stated unrelated people are included in the definition of a household member.
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TAXPRO Weekly - October 24, 2013