Question: My 21 year old son was added to our #CoveredCalifornia account with a start date of 9/1/16. He made $12,000 during the last 4 months of 2016. We are having issues with him stating that he is going to claim himself. Which do you think would be the harder hit, taking the $12,000 overage on our income for the year or covering him for 4 months and not claiming him.
Answer: My original answer to this question was wrong. This is the corrected answer. Explain this to your son. If he claims himself, his taxable income will be $12,000 minus his standard deduction of $6,300 minus the personal exemption of $4,050 for a net taxable income of $1,650 resulting in a $165 tax liability. If you claim him as a dependent, he loses the exemption so his taxable income will be $12,000 minus his standard deduction of $6,300 for a net taxable income of $5,700 resulting in a $570 tax liability. So basically, your son will lose $405 if you claim him. However, the tax benefit to you, the parents, will probably be more than $405 because you are probably in a higher tax bracket. I am unable to compute the financial consequences in your 2016 Covered California account without more demographic info. Send another question with your email address, zipcode, ages of family members and income by member and I will be more specific. In 2017, you should no longer claim your son as a dependent. Thank you Ernest for providing this answer.