Full-year nonresidents of California filing Form 540NR, while not subject to the state's requirement that residents have qualifying health care coverage, nonetheless are subject to the same reporting requirement as residents.
Thus, the nonresident return requires you to indicate whether or not the taxpayer and their family had full-year minimum essential coverage (MEC), and if not to complete Form 3853, Health Coverage Exemptions and Individual Shared Responsibility Penalty.
When you start the California nonresident return you will be asked if the taxpayer and their family had minimum essential health care coverage for the full year. If the answer is Yes, Form 3853 won't be needed. If the answer is No, you'll need to complete Form 3853 and you will indicate that they are exempt from the MEC.
For a nonresident, completing Form 3853 is a two-step process:
- You will indicate the nonresident exemption for the months that exemption applies.
- You will indicate the months the taxpayer had neither MEC nor an exemption.
To complete Form 3853, from the California Nonresident Return menu select:
- Amount Due
- Health Care Shared Responsibility Tax
- Step 1 - indicating the months the nonresident exemption applies.
- Part III - Coverage Exemptions - Select New then the first individual listed.
- Months Claiming Exemption
- Select either Annual Exclusion, or select each month, and choose exemption code E.
- Repeat this step for each individual in the list. When you have done this step for all the individuals in the return, exit back to the main Form 3853 menu.
- Step 2 - indicating the months the taxpayer had neither MEC nor an exemption.
- Shared Responsibility Payment
- Edit Shared Responsibility Payment Individuals - Select the first person in the list.
- Months with No Coverage and No Exemption - Uncheck every month the taxpayer had either MEC or an exemption. Thus, a full-year nonresident will uncheck every box.
- Repeat this step for each individual in the list. When you have done this step for all the individuals in the return, exit back to the main Form 3853 menu.
Upon returning to the main Form 3853 menu verify the amount on the Shared Responsibility Payment line is $0. If it's not, verify the steps above have been completed for everyone in the return.
Note: This article provides guidance on completing Form 3853 in the California nonresident tax return. It is not intended as tax advice.
Additional Information: