Are all Individuals Living in the United States Subject to the Individual Shared Responsibility Provision?

Foreign nationals who live in the United States for a short enough period of time that they do not become resident aliens for federal income tax purposes are exempt from the individual shared responsibility payment even though they may have to file a U.S. income tax return. The IRS has more information available on when a foreign national becomes a resident alien for federal income tax purposes. Individuals who are exempt under this rule include:

• Nonresident aliens;
• Dual-status aliens in their first year of U.S. residency;
• Nonresident aliens or dual-status aliens who elect to file a joint return with a U.S. spouse;
• Individuals who file a Form 1040NR or Form 1040NR-EZ (including a dual-status tax return for their last year of U.S. residency); and
• Individuals who are claimed as a personal exemption on a Form 1040NR or Form 1040NR-EZ.

In addition, individuals who are not lawfully present in the United States and not U.S. citizens or U.S. nationals are exempt from the individual shared responsibility provision. For this purpose, an immigrant with Deferred Action for Childhood Arrivals (DACA) status is considered not lawfully present and therefore is eligible for this exemption.  An individual may qualify for this exemption even if he or she has a social security number (SSN).

Individuals who file a Form 1040NR or Form 1040NR-EZ, or are claimed as a personal exemption on one of those forms, do not need to take any action to claim an exemption from the individual shared responsibility provision. Other individuals who qualify for an exemption and file a U.S. income tax return should attach Form 8965, Health Coverage Exemptions, to claim the exemption.