Dependent or not dependent, that is the question.

I'm a new member and this is my first post. I stumbled across this site 2 years ago when my oldest son became a semi-finalist in the NMS competition. I learn something every time I visit.</p>

<p>I have a question. I don't know what to do regarding my son's dependency related to my personal income taxes and financial aid (FAFSA). It appears a student could be considered independent for tax purposes while still a dependent for financial aid. Here are our circumstances.</p>

<p>I (and wife) are residents of Wisconsin but my son is in his 2nd year at the University of Tulsa. He has a full-ride (tuition/room/board) scholarship but lived with us last summer (3 months) and comes home for fall, winter, and spring breaks. He pays taxes on the room/board portion of his scholarship (+$7000/year) which could be considered more than the value of the room/board we provide each year. I'm not sure. Practically speaking, he is paying his own way through school. We're a middle class family and he doesn't receive any financial aid. By the way, my next oldest will graduate this year so will be attending college starting in the fall of 2008.</p>

<p>I don't know if my son who is in college would be considered a dependent or not and I'm also wondering how my decision related to claiming him or not might affect the financial aid of my 2nd son when he starts school. Do any of you have knowledge of these matters or experience in this area? </p>


<p>Your son is a college student in Oklahoma, but is permanent residency is yours. For finaid purposes, your son is considered a dependent student. In most cases, students cannot become independent for finaid purposes while they are pursuing their undergrad degrees. The reality is that your son's permanent address for finaid purposes is your address in Wisconsin. He is a student, and most states (Wisconsin is one included in this) do not allow students to establish residency in their state if the only reason they are IN the state is to go to college there (which is the case with the OP's son). </p>

<p>Re: your taxes. That is your decision. You can claim him as a dependent. Many parents of scholarship recipients do this. Dependency for taxes is different than that for financial aid purposes.</p>

<p>By the say your son "doesn't receive any financial aid". Well he DOES...his full ride for tuition/room/board IS financial the form of merit aid. That is a financial aid package that is mighty fine.</p>

<p>I'm not sure why you have this question about your son's dependent status.</p>

<p>You've received a fine answer above, but I would like to add a bit to it with my very limited knowledge. </p>

<p>For FAFSA purposes, your son will remain a dependent. Some might consider having him file his own income taxes regarding the $7000 since he would theoretically be taxed at a lower rate. Even if he does this you maybe able to claim him as a dependent on your taxes. I think there is an income limit but am uncertain as to what it is or what the other IRS rules are. It's similar to a teen having a part-time job. Most parents still claim the teen on their taxes. </p>

<p>In terms of the second son's chances for financial aid: from all I've read having two dependents in college would certainly raise his chances for aid.</p>

<p>You can still claim your son as a dependent on your income tax return because, as long as he is a full time student under the age of 24, the money he has to pay tax on does not prohibit you from claiming him. Because you still provide a home for him, you are considered as providing towards his support. The scholarships he gets don't count as providing more than half his support.</p>

<p>He still files a return and pays tax on his own earnings, whether they are the taxable portion of his scholarship, or part time earnings. He does not, of course, claim himself on his own return.</p>

<p>When your second child starts college, assuming the first is still there, you will have two in college for FAFSA purposes</p>

<p>Just a note...this first child has a FULL scholarship for college. I can't imagine that the FAFSA with a second sib in college is going to make a speck of difference for that first kid. It could, however, make a difference for child number 2.</p>

<p>S is an independent student for tax purposes (he has residency in another state) but the FAFSA still regards him as our dependent as he is only 21 and has not yet received his first Bachelor's degree, even though he does not live with us and our home is no longer his permanent residence.</p>

<p>And converse to csleslie...our son is a dependent for tax purposes, but he is an independent for FAFSA purposes as he HAS gotten his bachelors degree and is a grad student. DS doesn't live with us either...but we provide significantly more than 1/2 of his support.</p>

<p>Thanks to all who responded. I just wanted to be sure to handle the FAFSA and IRS dependency questions correctly and you've provided the info I need to do that.</p>

<p>avg guy, We are in a near identical situation as yours with our DS. We claimed him as a dependent on our taxes.</p>