Abuse Victims Who File Separate Returns Are Eligible for Premium Tax Credit

Victims of domestic violence who are afraid or unable to contact their spouse to file a joint return may be able to claim the Sec. 36B premium tax credit using procedures announced by the IRS (Notice 2104-23). The new procedures, which apply to 2014 tax returns, will allow eligible taxpayers to circumvent the Sec. 36B requirement that, to claim the credit, married couples must file a joint income tax return.

Under Sec. 36B(c)(1)(C), taxpayers are considered married and must file a joint return to claim the credit if they are married “within the meaning of section 7703.” Sec. 7703(b) contains a general exception from the requirement that married taxpayers file jointly or separately by treating a qualified taxpayer as unmarried. To qualify for the exception, taxpayers must live apart from their spouses for the last six months of the year, file a separate return, maintain a household that is the abode of a dependent child for more than half of the year, and provide over half the cost of that household for the tax year.

As the IRS points out, many abused spouses do not meet these requirements. In the preamble to 2011’s proposed Sec. 36B regulations (REG-131491-10), the IRS stated that regulations would be issued to address domestic abuse and other situations that might prevent taxpayers from filing a joint return and asked for comments on how to implement that rule, including what documentation should be required. The IRS received many comments and says it is preparing proposed regulations to address this issue in the future.

To fill in the gap until the IRS issues regulations, Notice 2104-23 announces a procedure just for 2014 returns, which is the first year the credit is in effect. For calendar year 2014, a married taxpayer will satisfy the joint filing requirement by filing as married filing separately if the taxpayer (1) is living apart from his or her spouse when the taxpayer files the tax return; (2) is unable to file jointly because he or she is a victim of domestic violence; and (3) indicates on the tax return in accordance with the return instructions that he or she meets the criteria in (1) and (2). When the proposed regulations are issued, they will incorporate this rule for 2014.