U.S. citizens living in the United States are subject to the individual shared responsibility provision, as are all permanent residents and all foreign nationals who are in the United States long enough during a calendar year to qualify as resident aliens for tax purposes. Foreign nationals who live in the United States for a short enough period that they do not become resident aliens for federal income tax purposes are not subject to the individual shared responsibility payment even though they may have to file a U.S. income tax return.
Obamacare and Foreign Nationals: Who Pays the Tax Penalty?
We have recently received a lot of questions about the Affordable Care Act ("Obamacare") requirement that ALL persons in the United States prove that they have health insurance or face a penalty, and specifically whether that means ALL foreign nationals. The answer is yes, and no.
Anyone who meets the definition of a "tax resident," which is a person physically present in the US for more than 183 days in a year, must show that they have health insurance. This anyone with "lawful status" in the United States: As The IRS Says on their website:
This is somewhat misleading because it does not break down the difference between documented and undocumented immigrants. For example, H, L, E and other valid visa holders must comply with the health insurance requirement, and are entitled to the assistance under Obamacare to obtain it.
However, the answer is different for undocumented immigrants. For those without "lawful presence" in the United States, the requirement to obtain health insurance is waived, and there is no penalty to be assessed against the individual. On a person's taxes they will have to indicate that they are exempted from the insurance mandate. Undocumented immigrants INCLUDE DACA recipients who generally have "lawful presence," but who have been specifically excluded from compliance.
Finally, undocumented immigrants do NOT include individuals on other forms of "deferred action," as they do have lawful presence. For example individuals waiting for a U visa number after approval or VAWA approval waiting for permanent residence have "deferred action". Also, individuals with U Visas and TPS status, both of which are considered a "lawful status" by the USCIS, will have to seek health insurance or pay the tax penalty.
And you can see, the issue of Obamacare is complicated. Seek out qualified legal, tax and insurance assistance, and, as always, watch out for scams and frauds. If it is too good to be true, it is.