Now that we are knee-deep in tax season, we have heard reports of confusion about new tax filing rules related to health coverage for people in immigrant families. Here are some of the common questions we’ve heard so far and our answers.

Q: Are noncitizens subject to the tax penalty (or the individual shared responsibility payment) if they are uninsured?

A: Individuals who are not U.S. citizens, and who are not lawfully present as defined by the Affordable Care Act are eligible for an exemption to this penalty.

This list of noncitizens eligible for the exemption includes:

• Undocumented individuals
• People granted Deferred Action for Childhood Arrivals (DACA or “Dreamers”)
• Other immigrants who are not included in healthcare.gov’s list of “lawfully present” immigrants eligible to purchase coverage through the Marketplace. The National Immigration Law Center also has a helpful brief that explains who is “lawfully present” in more detail.

Note that the IRS just updated its FAQs (see Question 11) to specify that an immigrant with DACA status is considered not lawfully present and is therefore eligible for an exemption.

Noncitizens may also be eligible for other exemptions, such as having a household income below the threshold that requires them to pay taxes. A list of exemptions is available here.

Q: Do noncitizens actually have to act to receive an exemption from the tax penalty?

A: The exemption for persons with income below the tax filing threshold is automatic. However, an individual actually has to claim the other exemptions on his/her tax return by filing Form 8965. The exemption for certain non-citizens is claimed in Part Three, where individuals must list a code for an exemption. The code to use here is Code “C” in column “c” for “Certain non-citizens and US citizens and residents living abroad” is “Code C.” More specific instructions are available from healthcare.gov here.

For more information on tax filing and other exemptions, I recommend two great resources: one for Health Care Assisters, and one for Tax Preparers, from my colleagues at Health Reform: Beyond the Basics.

Q: Do all noncitizens that file taxes with an Individual Taxpayer Identification Number (ITIN) rather than a Social Security Number (SSN) qualify for an exemption to the tax penalty?

A: No! Eligibility for an exemption depends on the individual’s specific immigration status and not whether they use an ITIN or an SSN.

An ITIN is a tax processing number that the IRS issues to certain non-citizens who are required to pay federal taxes. Use of an ITIN does not mean that the taxpayer is undocumented! Taxpayers who file their tax return with an ITIN include undocumented immigrants and their dependents, but also people who are lawfully present in the U.S. such as certain survivors of domestic violence, Cuban and Haitian entrants, certain individuals with non-immigrant status (like student-visas holders), and certain spouses and children of individuals with employment visas.

Also, the use of an SSN when a noncitizen files taxes does not mean that an individual is not exempt. The IRS has updated its FAQs (see question 11) and Chart Explaining How to Claim or Report Exemptions to note that an individual may qualify for an exemption from the tax penalty even if he or she has a SSN.

For more information about ITIN’s, see this helpful fact sheet from the National Immigration Law Center. Also be aware that while ITIN’s are used for tax-filing, the IRS does not use ITINs to electronically verify income. So ITINs cannot be used when applying for health coverage on the federal marketplace. Some state marketplaces, however may request ITINs to verify information against state databases.