Question: My family of four gets subsidized Covered California insurance. My 24 year-old son is included in our household. He earned about $9,000.00 this year. Will we be penalized on our taxes for 2017? Should he enroll for 2018 for his own plan?
Answer: Your son must file his own tax return for 2017 since his income was over $6,300, but you can continue to include him in your household if you wish. When he files his tax return for 2017, he can opt out of his personal exemption. If so, all you have to do is update your Covered California household account to include his income. The added income will reduce your premium assistance, so you will pay some added tax for 2017. If he takes his own personal exemption for 2017, you must update your CC account by removing him from your household. This will reduce your household size to three going forward, but you do not have to include his income. You will have added taxes to pay for the 2017 tax year, because your tax credits were based on a four person household. You will probably need an accountant to figure out which path leads to the best financial outcome for your family.