I can't go back to college because I'm in collections, mom still claims me as a dependent. HELP!!!

Paying for College
1

I have about a years worth of credits away to finish my Bachelors at a private art school studying GD. I’ve also been out of school for a year as I owe my school OVER 8,000. This is a leftover balance after all scholarships, grants, etc (Normally it’s about ~$20k a semester) have gone through and in the past my mother would file for parent plus or take it out with Sallie Mae. However, last year my mother kept getting denied, which from my understanding is because she never filed her taxes in time. I feel helpless because I can’t really do anything until I turn 24 so she can no longer claim me as a dependent. She also files my taxes and I haven’t seen any of my tax returns in the past couple years…

This especially sucks because I’ve been living on my own and working my entire college career. (dormed for 2 years, had an apartment for 2 years now) and I make payments on my loans myself. The only thing my parents make payments on are my phone bill and car insurance (my car is in my dad’s name).

I’ve tried talking this over with her but it always turns out badly. Any mention of money sends my mom into a spiraling depression and she makes me feel so guilty. I’ve been going to my aunt for help lately because she’s gone through the student loan process herself and understands what’s going on, and she’s about ready to throw my mom under the bus for sabotaging my career so she can evade the IRS. I don’t want to call her out on it because I know my parents are really struggling financially and can barely provide for my sibling back at home so I feel like I owe them.

My school has helped as much as they can, I’ve written letters and talked with the financial aid office many times. They’ve given me as much as I can get. I’m afraid I can’t ask for too much more because in my last semester I was nearly placed on academic probation because I couldn’t handle the stress of working and being a student full time with the added financial pressure of not being able to pay off my school. I dropped about 2 classes which really hurt me. (classes are 6 hours long, homework takes HOURS to complete, it’s difficult to juggle while working) This is extra upsetting because I love my major but my creativity has been completely sucked dry out of me and sent me into a depression.

I can’t even save up the money I owe because I live paycheck to paycheck making payments on my loans and on my apartment. I refuse to live back at home because the environment is incredibly toxic and I value my job too much, there really aren’t any jobs for my out where my parents live. I’m afraid to defer on my loans because way back when I first started school I had to have my grandmother cosign and I have to make payments for a few years to get her name taken off so I don’t trash her credit. I’ve tried applying for loans through banks but I’ve been denied many times.

Luckily I have a great job in my field that’s willing to help me go back to school financially but I don’t want to ask them to help me pay off what I still owe(The don’t know this is the reason why I can’t go back, they think I’m just taking time off to work) The way the conversation went it seemed like it was just moving forward. My game plan once I pay off my debts is to take maybe 1 or 2 classes at my current school and take whatever academics I can at an outside university to save as much money as I can.

What can I do? Am I stuck until I turn 24?

TL;DR:
My mom was super late on paying her taxes so I couldn’t take out loans, which in turn forced me to drop out as I still owe my school $8,000.

2

Not an expert (hoping others will chime in), but

You are legally responsible for filing your own taxes. You are legally required to sign your own tax returns. If you haven’t seen them, you haven’t signed them, so you haven’t (legally) filed them- and you will be held responsible, not your mother.

One other piece of un-asked for advice: cut back your expenses. You may not be able to move home, and you may not be able to live rent-free with a relative, but a LOT of us lived in shared housing when $$ were tight.

3

Yes, you should do your own taxes. Get working on this. Most students have a pretty simple tax situation. Only one of you (you or your mom) gets to take the personal exemption for you, which was $4050 in both 2016 and 2017. If you submit your own tax forms for the last two years the IRS will tell you if you have already paid (via your mom).

Even if your mom paid her taxes, would she still be able to qualify for a parents plus loan? why was the grandma co-signing if the mom has good credit?

Following the above suggestion, if you have your own apartment, you should find a cheaper co-housing arrangement but it wasn’t clear if you are living on your own. It is a tough situation - sounds like money is tight all around. Hopefully you are able to start finding work in your field even before you get your degree.

4

Thanks for the reply,

I’m going to look into the tax situation, obviously I shouldn’t take financial advice from my mother lol

My parents have really bad credit, they once filed for bankruptcy in the early 2000’s so I’m not sure if that’s why. Honestly I couldn’t tell you why they’re struggling so hard financially when they both make livable wages and live in a relatively cheap area.

I currently have roommates and I live in a “cheaper” apartment for the area, unfortunately the state I live in has very high living expenses. I would have gone for a cheaper apartment but I learned my lesson last year, while my rent was only $300, I lived in a very unsafe neighborhood so I really don’t want to sacrifice my safety to save on money. I’m on the hunt for a second job again so that will help greatly, it will just be awhile until I can save what I owe.

5

When you say that your mom still claims you as a dependent, do you mean she claims you as a dependent on her tax return?

If you’re living on your own and supporting yourself, your mother shouldn’t be claiming you as a dependent on her taxes.

6

The ‘claiming as dependent’ will no longer be an issue in 2018 under the new tax laws. This will be little, if any, benefit for the mother to claim the OP as a dependent if he’s not in school (ATOC and a $500 credit available to parents of students) It won’t help OP with FAFSA for this coming year, but will in future years.

7

OP- are you at a for-profit school by any chance? Is there a public U near you which has a program in your field? I’m thinking that once you are able to pay off the 8K, is there a less expensive way for you to complete your degree?

8

File your own taxes this coming January/February and afterwards tell your mother, “I’m an adult now, I’ve got this!” (as in “hint, hint: don’t try to claim me as a dependent”). You are likely to get a refund, which you can put towards paying off your college debt.

9

If your mom was denied a Plus Loan…YOU were then eligible for an additional $4000 a year in Direct Loans. Did you take those?

10

A dependent doesn’t have to be a student in order for a taxpayer to get the $500 child tax credit.

11

When you were living in the dorm, you would have been considered to have lived with your parents. Unless you were providing more than 50% of your own support, it was correct to claim you as a dependent. However, any year where you provided 50% of your own support, or you didn’t live with her for more than 50% of the year, you were NOT her dependent. She cannot legally claim you for those years. Her tax returns may need to be amended (corrected), as will yours for those years. It really doesn’t matter who benefits more, or whether you are willing to let her claim you - the rules are the rules, and breaking them is considered tax fraud. This is particularly bad if your mother claimed earned income credit, as that could be a significant amount due back to the government.

If your mother can’t find copies of the tax returns, you can request transcripts from the IRS. There will be a fee to get a copy of the actual tax returns, but if you are willing to copy numbers onto a copy of the forms, a free transcript will do.

The FAFSA for 2018-19 is based on tax returns from 2016 - are you saying your mother has only recently filed 2016 taxes? If so, help her to make sure 2017 gets filed (yours too)! Were you working full time in 2017? Perhaps if you file your own return ASAP, you will get a refund which you can apply to that balance. You might also apply on your own for a personal loan to pay it off. If you’ve been making payments on loans your grandmother cosigned, you might have good enough credit history.

Next year, if you are confused about filing your own taxes, look for a VITA group - they are volunteers trained and sponsored by the IRS, who will file your return with you, as long as you meet their income guidelines, and it’s completely free (if you want to bring them a dozen doughnuts or pizza for the volunteers, they will be very appreciative).
You need to segregate your finances from your mothers, before she causes more problems for you.

12

The new tax law means there’s no point in claiming you as a dependent anymore - the system has changed and your parents won’t receive the same credit as they used to.

Anyway it sounds like claiming you would mean tax fraud. You can’t get all self riggteous with your mom but… you should complete your own taxes and file them yourself.

13

To the contrary – the child tax credit still exists, it has in fact been doubled to $2,000, the refundable amount has increased, and the phaseout level is much higher than it used to be. And yes, the deduction (not credit) for a dependent’s exemption has gone away, but that loss has been compensated either fully or partly (depending on your top marginal tax rate) by the increased child tax credit for dependents who qualify or by the $500 dependent credit for those dependents who don’t qualify for the child tax credit.

14

Doesn’t the child have to be under 17 for the parent to claim the child tax credit.

15

For the former child tax credit and the better version that it has morphed into, yes. But there is a new $500 dependent credit, for those dependents that don’t qualify for what’s commonly referred to as the child tax credit.

16

It’s my understanding that your being considered dependent for FA has nothing to do with your mom claiming you as a dependent. It has to do with your age. Even if she stops this practice, it won’t change your status for FA. It’s wrong of her if she isn’t supporting you but I don’t think it’s an obstacle for you . . . ?

17

That’s right. The mom’s tax filing status (claiming kid as dependent…or not) is NOT something that is a qualifier for independent status for financial aid purposes.

18

The child doesn’t have to be a student for the parent to claim the dependent credit, but being a student extends the age limit of qualifying child.

If it is not a qualifying child and just dependent relative, the income limit is (was) $4050. That would exclude a lot of 19-24 year olds who aren’t students from being claimed by the parent as a qualifying relative, and not able to get the $500 credit.

19

I am so sorry that you are going through this. I am not quite sure what happened with your mom that messed up your aid, but it’s water under the bridge. You need to focus on what to do now to move forward. How to pay off the $8,000? I would suggest starting by being honest with your employer. Don’t tell them the whole story - just tell them that you had issues with your financial aid and ended up with a big balance that you now owe them. Try to come up with a plan that will work for you.

Be aware that once you have been away from school six months, you will owe on your federal loans. You’ll probably want to get into an income based repayment plan so you can keep your payments low in order to save money to get back into school (your loans will go into deferment if you get back into school at least half time, but not if you are just taking a class).

If you have private loans (which it sounds like you do, if your grandma cosigned), those do into repayment right away when you leave school. You’ll need to contact your lender so you don’t get behind on payments.