TP exclude daughter thus excludes daughter's 1098-T?

[AZ-Tax]

Taxpayer wants to exclude daughter as a depedent for the sole purpose of the daughter qualifying for college Financial Aid. The daughter has no W-2 nor any earned income in 2009. She does have 1098-T in her name that generated some Lifetime credit.

If I delete the daughter as a dependent and she has no earned income, she would not be required to file a 08 tax return correct?

Also, the parent's woud loose out on the daugher's portion of the Liftetime credit not to mention the exemption.

[RitaB]

Correct on all

But, I would think that the financial aid folks would want to see the daughter's return, which would indicate that someone else COULD claim her as a dependent, and then all this creativity (on your clients' part, not yours), would be lost along with the education credit. I could be wrong, but I would think the financial aid people have thought about this scenario already.

The lengths people go to for free money amaze me.

[Nashville]

Something is Wrong with this Picture

I certainly don't write the guidelines and regulations for various govt agencies, but why would ANY financial assistance agency disqualify an applicant because her parents are claiming they provide over 50% of her support?

If we interact with five different federal or state agencies, do we have to change our story to suit the qualifying criteria of each agency?

Geez.

[RitaB]

I'm guessing

...why would ANY financial assistance agency disqualify an applicant because her parents are claiming they provide over 50% of her support

That the parents' income is what would disqualify the student. So, maybe they shouldn't be asking for aid.

[Gretel]

The people from FASFA and all other working with financial aid are not stupid.

I know I have shared this before: When I moved west, my son who in fact supported himself fully and could prove that he did so, had a heck of a hard time no to be considered a dependent of me, even though he never was out west. They couldn't care less what someone does on the tax return.

[Jesse]

It is my understanding that until the child reaches the age of 24 the parent(s) income is still needed for FAFSA application process unless there is unusual circumstances such as Emancipated Minor, other guardianship, or homeless.


If they do not claim the child or take the education credits it sounds like a loose/loose situation.

[AuditorTurnedGood]

I

have determined when the time comes for our future kids to go to college, 2 things will be true:

1. We already make too much money (which really isn't that much) for them to get anything besides Federal loans, so unless they are especially brilliant or a shockingly good football/lacrosse/fast pitch/swimmer, there's no point in filing the FAFSA, and

2. A 4 year education in the year 2030 (or so) should cost around 100-200K, a Master's degree will be part of the undergraduate program, and the Unviersity of St. Thomas will still be calling me for donations.

[RitaB]

I agree

The people from FASFA and all other working with financial aid are not stupid.

And I would probably go ahead and let the parents do this stupid thing, just because they are trying to beat the system.

I have kids age 16, 17, 21 who have to depend on Mom and scholarships. I know of one student who received a boat load of aid because her single dad (allegedly) cheats on his taxes. (This info is from the single Mom of the child, so you know how that goes.) If the parents were married, the student wouldn't qualify.

Hey, is that a marriage tax?

[erchess]

Financial Aid

When I went to college and grad school (77-84) if you didn't want your parents' income figured into your financial aid then they had to sign a statement that you were no longer being supported by them financially and they would not be claiming you as a dependent. I had understood that it was a fairly simple and straightforward process but I could have been under a false impression.

[Gretel]

Well, it was back then. Things keep changing .....

[Jesse]

..........

I know of one student who received a boat load of aid because her single dad (allegedly) cheats on his taxes. (This info is from the single Mom of the child, so you know how that goes.) If the parents were married, the student wouldn't qualify.

Hey, is that a marriage tax?

I don't understand why both parents income isn't taken into consideration in determining eligible financial aide. I too have a 16 and 17 year old and if I were to divorce they would qualify for that boat load too, not because I cheat on my taxes, but because they only would consider ONE parents income.

Off topic, national report out today released staggering number of single parents! Well, duh, what incentive is there to marry. If not married I'd qualify for free health care, my kids would have free lunch in school and free college tuition.

[David1980]

Well, it was back then. Things keep changing .....

Yeah, in order to not have parents income count if you're under 24 you really do need to have extreme circumstances. Preferably emancipation.

[AZ-Tax]

Assume parent opt out of claiming her, then can they amend?

Assume parent opt out of claiming their daughter on their MFJ tax return. I am guessing some where on the Financial Aid application their is a question on whether the applicant was claimed as a dependent on their parents tax return. If so and the applicant answers "no", am I correct that the parents may never amend their 08 tax return to include their daughter?

[David1980]

Assume parent opt out of claiming their daughter on their MFJ tax return. I am guessing some where on the Financial Aid application their is a question on whether the applicant was claimed as a dependent on their parents tax return. If so and the applicant answers "no", am I correct that the parents may never amend their 08 tax return to include their daughter?

IRS tax return and FAFSA have different rules for dependency. I see no reason that the parents couldn't amend to claim the child. Then again, odds are 99% that it makes no difference as far as the FAFSA whether or not the parents claim the child on their IRS tax return.

http://www.fafsa.ed.gov/before015.htm

Run through the questionnaire here to see some reasons a dependent may be considered a non-dependent for the FAFSA. (It's basically impossible unless over age 24.)