Yes, you must include your dependent’s modified adjusted gross income (MAGI) on your household income for the Premium Tax Credit (PTC) if the dependent is required to file an income tax return because their income meets the income tax return filing threshold. This is specified in the instructions for Form 8962 and Publication 974 for 2025.
Household Income for PTC
- Definition: Household income for the PTC includes your MAGI, your spouse’s MAGI (if filing jointly), and the MAGI of each dependent you claim who is required to file a tax return due to meeting the filing threshold.
- Exclusion: You do not include the MAGI of dependents who are filing a return only to claim a refund of withheld or estimated tax.
- Calculation: Use Worksheet 1-2 in Form 8962 to calculate the combined MAGI of your dependents. This worksheet includes AGI, tax-exempt interest, and nontaxable social security benefits (if applicable).
Relevant Tax Rule
The rule is defined in the General Instructions for Form 8962 under “Terms You May Need To Know > Household income.” It states that household income for PTC purposes is the modified AGI of you and your spouse (if filing jointly) plus the modified AGI of each dependent who must file a return due to income meeting the filing threshold.
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Disclaimer: Always verify with the current year’s Federal or State Department of Revenue Forms and Instructions. For complex situations, consult a CPA or tax attorney.