<p>My daughter has decided to claim herself as an Independent this year. She believes this will grant her more FAFSA money. She says everyone she knows got a FAFSA grant and she only got a loan. She lives on her own (with friends) and works part time. I help with tuition, housing and emergencies. My tax preparer suggests I claim my daughter as my dependent but my daughter refuses. My tax lady has offered her an appt. to answeer these questions but she is determined to claim herself as an independent. I am a divorced teacher. Her father provides no support. Any advise would be greatly appreciated. Thanks in advance.</p>
<p>There are two issues:</p>
<p>The IRS says for you to claim an exemption for your daughter that:</p>
<p>The child must not have provided more than half of his or her support for the year.</p>
<p>If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself even if the other taxpayer does not actually claim you as a dependent.</p>
<p>Also check your health insurance. Some require that she be dependent on you.</p>
<p>She needs to research the facts of financial aid. She is completely wrong in thinking this will get her more aid. It will make no difference to what she gets as financial aid. Even if she claims herself on her taxes she is still considered a dependent for FAFSA unless she is 24 or meets one of the other criteria to be considered independent (none of which are about being independent for tax purposes). So her EFC will be based on your income and assets as well as her income and assets. Her friends may be getting grants because their parents are lower income or they may be considered independent for other reasons. We have not claimed my son on our taxes for several years as he was earning too much. For FAFSA he was still considered our dependent and had to report our income and assets.</p>
<p>As far as taxes are concerned. Did she provide more than half her own support? If she did not then she is still considered your dependent for tax purposes. So she still can not claim the personal exemption on her taxes if she is eligible to be claimed by you.</p>
<p>Other things to consider are whether she will still be allowed on your health insurance if she is not claimed as a dependent on your taxes. Also you will lose eligibility for the education tax credits if you can not claim her as a dependent even though you are paying her tuition. She would be the one allowed to claim it but if she is not earning half her own support through earned income she would not be eligible for the refundable portion and the tax benefit would be fairly limited. With the new AOC (up to $2500) this may be quite costly to you. </p>
<p>If she is determined on this course she will probably not get any additional aid and it will probably cost you considerably in taxes. If it were me and she insisted on going that way I would tell her that as I am paying for the tuition and am losing the tax credit she would have to cover that amount herself.</p>
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Have her go look at the questions for FAFSA on what makes her independent or not. She’ll probably have to see for herself that she isn’t eligible, even if you don’t claim her.</p>
<p>Ditto the above…you can’t just “decide” to become independent. AND your tax filing status and independence for financial aid purposes don’t have ANY connection. Even IF your daughter is able to claim herself on her taxes…and the parents don’t…the parental information is still REQUIRED on the FAFSA unless she is able to answer yes to one of the defining questions for independence for financial aid purposes (ward of the state, orphan, married, supporting a dependent child, veteran, over age 24, already has a bachelor’s degree).</p>
<p>If she provided over half her support then for tax purposes, you can no longer claim her on your taxes. She will complete her own taxes. But she will still be considered a dependent as far as financial aid goes. Until my son graduated, I had my fafsa contributions to make but I didn’t claim him on my taxes for the last three years of his undergraduate years since he went to school, worked and had scholarships and paid over half of his support. Once he became a graduate student, I was no longer held responsible for tuition contributions and he is an independent, fully.</p>