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FAFSA divorced parent question

Nim ChimpskyNim Chimpsky Posts: 5Registered User New Member
edited September 2008 in Financial Aid & Scholarships
Here's the situation:

Divorced parents, daughter lives full time with dad. Dad claimed her on the taxes and was responsible for 100% of her support.

Dad: makes between $150-$200k per year, just a few assets, no college savings

Mom: probably made about $15k (maybe), self-employed deep in debt


Dad was told that he HAD to fill out the FAFSA this year because he claimed the kid on the taxes, she lived with him and was 100% of financial support.

So dad does so and gets an EFC of $26,000.

Daughter gets accepted to 2 great out of state schools and 2 in state schools.

The FA package was identical for all 4 schools: $3,500 subsidized loan and the remaining amounts PLUS.

Daughter picks most expensive of the 4, $38,000 total cost.

Questions:

1. Is it OK to have mom fill out FAFSA next year?

2. In order to do that, does daughter have to have mom's address as her permanent address with the school?

3. Does mom need to claim daughter on 2007 taxes?

(mom's probably going to make about the same, dad will more than likely make more and the tax benefit is negligible if daughter gets a lot more aid)
(mom and dad are on good terms and mom is amenable to doing FAFSA)

4. Could anyone estimate how much aid daughter might get if mom's income is used vs. dad's?


Thanks in advance.

I don't want to raise any red flags with the feds or with the school if suddenly daughter goes from upper-middle class to about poverty level.
Post edited by Nim Chimpsky on
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Replies to: FAFSA divorced parent question

  • swimcatsmomswimcatsmom Posts: 15,052Registered User Senior Member
    FAFSA is supposed to be filled out by the parent with whom the student lives the most. if the time is evenly split then it comes down to who provides the most support.
    If your parents are divorced (or separated - see below for more information), answer the questions about the parent you lived with more during the 12 months preceding the date you complete the FAFSA. If you did not live with one parent more than the other, give answers about the parent who provided more financial support during the 12 months preceding the date you complete the FAFSA or during the most recent year that you actually received support from a parent. If this parent has remarried as of the date you fill out the FAFSA, answer the questions on the remaining sections of the FAFSA about that parent and the person he or she married (your stepparent).

    It may raise red flags as it seems unlikely Mom would suddenly be providing more support especially with her low income. I do not know how financial aid officers would regard this.
  • vballmomvballmom Posts: 3,132Super Moderator Senior Member
    1. Not ok to have mom fill out FAFSA if she hasn't provided the majority of the daughter's support (is she paying for daughter's college?)

    2. Daughter would have to have mom's address.

    3. Who claims daughter on taxes is irrelevant to FAFSA. In general the IRS expects the higher-income parent to claim the dependent so that the dependent is taxed at the higher-income parent's rate, but FAFSA doesn't have this requirement.

    4. If mom's income is $15K and she files an IRS Form 1040A or IRS Form 1040EZ income tax return, then she qualifies for the Simplified Needs Test which disregards assets when determining the expected family contribution. Using mom's income would probably have given daughter substantial aid.

    Bottom line: there are a lot of red flags here that would be raised if daughter's situation changes so much. How would you explain all of this if audited? I understand the reasons for exploring these different scenarios (I'm divorced myself) but don't think it's legal or ethical to change who fills out FAFSA without the mom truly providing the majority of the daughter's support.
  • Nim ChimpskyNim Chimpsky Posts: 5Registered User New Member
    Thanks for the answers.

    I suppose in retrospect I probably should have had her mom fill out the form and take my chances at an audit. Now I've sort of established that baseline and may have to live with it.

    I can actually think of real life examples, though, where the dad suddenly leaves the picture and now the kid and the mom are left to do whatever to survive.

    If that is the scenario that would be communicated IF questioned, does that sound legit?


    In a somewhat similar situation, my ex did this before. She had a kid from a previous marriage and he was, for the most part, supported by dad and lived with dad. But he had mom fill out the FAFSA and he got aid and things worked out OK.

    I'm just wondering how much you can game the system. If it's a matter of interpretation and not fraud, I would hope that you could argue the case.
  • hsmomstefhsmomstef Posts: 3,579Registered User Senior Member
    I know that in some cases the kid lives with one parent one year, the other parent the other year -- totally legit, as far as I know.

    FAFSA says to put down the info for the parent the child lives with most -- as long as you have a parent you live with most, amount of support doesn't come into play as far as I can tell from the wording.
  • somemomsomemom Posts: 9,355Registered User Senior Member
    If the DD could REALLY move to live with the mom, and the Dad provided child support, mom would show that on the schedules ABC, but possibly the DD would get some aid, but the DD needs to actually move to live with the mom.
  • Nim ChimpskyNim Chimpsky Posts: 5Registered User New Member
    I think I found an interpretation of the rule listed above. THANKS hsmomstef!

    The rule states that you should use the parent that you lived with MORE during the preceding 12 months.

    THEN.....

    If you did not live with one parent more than the other, give answers about the parent who provided more financial support.


    That means to me that if the kid split equal time with mom and dad that THEN you should use the person who provided more financial support.

    Mom and dad DO live in the same city and daughter does split time over at her house. I just need to count and make sure that the days logged thus far this year, plus her time home from break is mom-time > dad-time.

    I don't think I need to even change her address, though I just might for legitimacy and legality.

    Please, don't construe my "interpretations" as ANY intent to break the law. I think that my reading of what FAFSA says is correct, assuming that we make sure that she has more time at mom's than dad.

    As far as child support, we had agreed on emancipation at age 18 in our divorce decree.

    Does this sound OK?

    Comments?


    thanks you 2 moms
  • vballmomvballmom Posts: 3,132Super Moderator Senior Member
    Since you originally said that daughter lived fulltime with Dad, my response was that Dad has to file FAFSA. If this isn't the case, and it can be documented that daughter lived > 50% with Mom, then Mom can file FAFSA.

    From finaid.org:
    Financial aid applications can be somewhat confusing because there are several different criteria applied for different kinds of parenthood:

    1. The parent with whom the child lived the most during the past 12 months.
    2. The parent who provided the most financial support to the child during the past 12 months.
    3. The parent who provided more than half the child's support (and will continue to do so).
    4. The parent who has legal custody.
    5. The parent who claimed the child as a dependent on their tax return.
    6. The parent who provided the most financial support to the child during the most recent calendar year for which either parent provided more support to the child.
    7. The parent with the greater income.

    As noted above, criteria 1, 2 and 6 are used for determining the custodial parent, with the first criteria being primary. In a situation where the parents split all costs equally (without even a penny difference), criterion number 7 is often used.

    FinAid | Answering Your Questions | Divorce and Financial Aid
  • thumper1thumper1 Posts: 38,380Registered User Senior Member
    >>Dad was told that he HAD to fill out the FAFSA this year because he claimed the kid on the taxes, she lived with him and was 100% of financial support.>>

    That is absolutely correct.

    >>I suppose in retrospect I probably should have had her mom fill out the form and take my chances at an audit.>>

    I'm sorry but if the student lived with the dad and he provided 100% of her support (as you mentioned), advising the mom to fill out the FAFSA could be viewed as fraud. It would not only jeopardize the student's financial aid but could also jeopardize her acceptance.

    >>Mom and dad DO live in the same city and daughter does split time over at her house.>>

    That's not what you said originally. Please just be honest. Your posts are making it sound like you are trying to figure out a way to increase need based aid...and you are groping for ways to do so.

    >>2. The parent who provided the most financial support to the child during the past 12 months.>>

    This IS considered. Not ignored.

    >>7. The parent with the greater income.>>

    I don't think I have to explain this.
  • cptofthehousecptofthehouse Posts: 25,333Registered User Senior Member
    As far as emancipation at age 18, that one isn't going to fly. She's either your dependent or your wife's until she is about age 24 unless she falls into certain situations such as military veteran, motherhood, marriage, court order. Declaring it in the divorce decree does not count for a thing.

    I am of the mind that you keep track of where she spends her time this upcoming year, her mother can claim her as a dependent for financial aid purposes. This is independent of dependency for tax purposes. You can agree on who claims the child, the children, including splitting them on the tax forms and do it so it is most advantageous.

    My experience with the FAFSA is that families in the know make sure that the parent with the lower income gets the time spent so that financial aid can be maximized. I know a number of situations like this. In our small world there are college officers who well know the family situation and how it is filed. I have not heard of a single case where this was pursued. If the child clearly does not see a parent and is claiming that parent as custodial just for financial gain, it could be a problem, but in cases where custody is pretty much shared, it is loosly interpreted is WHAT I HAVE BEEN TOLD. I suggest anyone affected by the situation to call several financial aid offices and ask, particularly the one from your child's school. Or call the number at FAFSA.
  • bandit_TXbandit_TX Posts: 2,373Registered User Senior Member
    Remember also that this only applies to FAFSA only schools. Profile schools require the Non-Custodial Parent disclosure, so both incomes count regardless.
  • ChedvaChedva Posts: 20,047Super Moderator Senior Member
    I'm just wondering how much you can game the system.
    As much as you can game the IRS. You sign FAFSA under the same requirements of truthfulness as apply to your tax returns. Lying on FAFSA or using the non-custodial parent's information is a Federal crime.

    Do people do it, as in your example? Sure. Do people cheat on their taxes? Of course; all the time. Do they not get caught? Certainly. But some do. And if you do, there are penalties.
  • thumper1thumper1 Posts: 38,380Registered User Senior Member
    Check also...some FAFSA only schools also have a school financial aid form that does require information from both parents regardless of marital status. Also, we (on this board) have yet to find a college that ONLY uses the FAFSA but meets full need (full need schools tend to use the Profile and/or a form of their own...with BOTH parents' information to determine financial aid awards). So...even IF you child gets more need based aid, it will still not likely pay for the full cost of attendance at any FAFSA only school. These schools tend to "gap" students. The maximum federal money is not enough to cover the full cost of attendance at any college other than a community college.

    I guess what is troubling to me is that this parent (the father) HAS an income (a very high one at that). An income in the $150K to $200K range should be able to support a student in college. Are you planning on NOT contributing to your daughter's college education? Seems to me that your EFC is very doable for your salary. A $26K EFC on a salary in excess of $150K is quite on the low side for that salary range. Many folks with that salary are looking at an EFC in the $40K range.
  • Nim ChimpskyNim Chimpsky Posts: 5Registered User New Member
    Gaming the system is American as baseball, apple pie and chevrolet. [JK]

    Why do CPAs and tax attornies exist? They read an IRS reg, have a certain interpretation and do something. If the IRS disagrees with their interpretation they say so. If there is no consensus, it goes to court. And it is no slam dunk that the IRS wins every time.

    I read the IRS reg on taking a deduction for a home office. The way I read it, mine qualified for the deduction, so I took it. The IRS questioned me, I answered and they disagreed. I didn't see the need to push it, so I paid the penalty and the tax due. No biggie. I wan't trying to "defraud" the gubmint.

    As far as the living situation with my kid, I wasn't 100% clear. She DOES spend time and overnights at her mother's house. There are no longer "custody" laws in CO. They use the terminology "parenting time". We split "parenting time" equally and have done so ever since we have been in the same city.

    I've claimed her on my taxes since there was really no benefit to my ex doing so. I paid her alimony and child support for years. That's what she lived on. When that shut down, she had to get a job. That's why there is such a disparity in our earnings.


    The thing is, I really dropped the ball on the whole "paying for college thing". I was very careful with her in helping her pick the right college, chosing a major, advising, went on dozens of visits...all that stuff. We were WAY ahead of the curve.

    But, when it came time for FAFSA, I dragged my feet getting it done and was "complacently ignorant"? of the process and the financial impact that it would have on both me and my daughter. So I guess my questions here were probably borne more out of my own frustration and anger at myself than trying to find a way to "cheat". And there is a lack of experience as well. My college was 100% paid for (service academy) so I never had to deal with FAFSA and loans and all this stuff.

    I only have one kid to get through and for that I'm thankful. I do make enough to foot the entire bill, and again I'm thankful.

    If I had known that this great site existed, I probably would have been WAY more prepared and better informed.

    In the end, I know I have too much integrity to deliberately lie or cheat. I was only hoping that MAYBE I was missing something that might allow us some more aid.
  • Nim ChimpskyNim Chimpsky Posts: 5Registered User New Member
    See above thumper. I'm the dad and I have paid EVERY dime for my daughter's upbringing and will continue to do so.

    If there is something I am missing, I would be pretty ****ed that I didn't find a way to save several thousand bucks.
  • cptofthehousecptofthehouse Posts: 25,333Registered User Senior Member
    I am not sure what is meant by "gaming the system". If you mean doing things that are legal to get the most that the system can give you, that is good financial planning. If you mean cheating and lying, it means exact as Chedva says. There is also a whole gray area where you can do things that fall in between and take the risk that it falls into either of the two categories. Those range from submitting false data that cannot be proven or unlikely to be questioned, to doing manipulations that so that you are within the letter of the law but it looks as fishy as a lagoon. When you get into that area, you take the risk of being questioned, hassled, and end up being penalized, then having to fight it. May not win either. So that whole area is not something that I would want to address. I would talk openly with the financial aid office if you fall in that situation, maybe anonymously first and then get an official answer even in writing if they support you in interpretation.

    The definition of custodial parent and dependent is very different for FAFSA than it is for the IRS, according to court documents, for state residency requirement (depending on states) and in actuality. The primary determinant (and they make this clear in their literature) is who the child lives the most during the 12 months prior to FAFSA filing. I know many situations where children lived much more with the parent who is not spending the most money on them, is not the custodial parent by court papers, is not the parent who is going to be able to pay for the college, and is not the official address for all mailings. All that is supposed to count for FAFSA purposes is that the child is living with that parent which leads to some really crazy situations. A child in the situation that I just described can certainly get federal aid if that custodial parent by FAFSA definition meets the financial requirement, even if she's Donald Trump's daughter. It can also be to the family's financial disadvantage if the child ends up living more with the parent with more resources even though court papers, IRS dependency, official address. parental involvement in the child's life outside of home show that the less well heeled parent is custodial. In high school, especially these arrangements can occur for expediency and convenience sake, for instance, if the school and activities are much closer to the parent who does not have the care and custody. I see this all of the time. My high school senior spends very, very little time at home. He comes home late from athletic practices and events and is gone weekends. Where he predominently sleeps would be where he lives the most . Now, in our case we are not divorced so there is no issue, but he has friends with a custodial parent in NYC and the other in the suburbs where it would be difficult for anyone to say where the kid lives the most in a given period of time. Especially if they are away for the summer or find a job without consideration to which parent is custodial. You can all see this gray area. So in cases like that, it is smart for FAFSA purposes for the custodial parent by their definition to be the one that will qualify the child for the most money, and may not take much adjustment in scheduling, or maybe manipulation, to get that end result.

    You see FAFSA is screwed up. Someday I'll post a list of the contradictions and idiocies of the form. This custodial parent thing is one example of their vagueness in definition that leads to such gray areas. It can even lead to outright contradictions. A child can be double counted as a dependent on FAFSA, for example. It makes no sense and it smells like fraud but it is not. It is the letter of the law. If your child is pregnant at the time of filing, she is not a dependent even if she ends up not delivering the child.

    There is a whole website that goes into divorced and separated parents and what the financial aid directors are told to do in looking for fraud. If you google those things, you can find it. I'll try to get that link for you. What is more important to them than who is the custodial parent is how much money is given in terms of support for the child which is another gray area. You see the custodial parent has to show income. Child support and other monies given for the benefit of the child by the non custodial income is supposed to be shown in that parent's income. I can tell you 100% that this is something that the govt and FA looks for. If they see a very poor custodial parent getting nothing for child support, and sniff a well to do non custodial parent that is a red flag. So a kid in boarding school for instance with the non custodial parent paying the tab, is going to have to show those payments in the FAFSA. A parent cannot "gift" things to the kids in this case. And support is not the IRS or court ordered definition. It's what you are actually paying just as the living there is the actual time spent. That can make it non worthwhile to stick the kid with the poorer parent for aid purposes.

    I don't know a single person ever questioned about who was the custodial parent. They don't seem to care about that. BUt I know LOTS of parents hauled with requests for bank statements about how much money is exchanging hands in that child support question.

    I am no expert in this. Just an amateur parent who is going by anecdotes, so please do not take this as gospel. It is my take on the situation, and I am being as honest and thorough as I can, but am not a FA counselor, accountant, or IRS agent.
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