The IRS today released an advance version of Notice 2018-84 announcing that the Treasury Department and IRS intend to amend existing guidance that is based in part on the personal exemption because the new U.S. tax law reduced the personal exemption deduction to zero for a 10-year period.
Notice 2018-84 [PDF 36 KB] explains that the rules in the existing regulations for determining the premium tax credit in a qualified health plan (sections 36B and 6011) and the individual shared responsibility provision under a health plan (section 5000A) currently rely on a determination as to whether the taxpayer claimed a personal exemption deduction. However, the new U.S. tax law (Pub. L. No. 115-97, enacted December 22, 2017) reduced the amount of the personal exemption deduction to zero for tax years beginning after December 31, 2017, and before January 1, 2026.
As the IRS notice explains, because the new tax law reduced the personal exemption amount to zero, taxpayers will no longer claim a personal exemption deduction and this raises questions concerning what it means to claim a personal exemption deduction for purposes of the premium tax credit and the individual shared responsibility provision.
As interim guidance, today’s IRS notice explains that:
The guidance provided in Notice 2018-84 applies to tax years beginning in 2018.
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