3 kids, the middle one is getting aid from a relative not the parents, will that affect the EFC of the other kids if they go to full need schools?
This is a hypothetical that I am trying to understand. Kid 1 is a college sophomore and he goes to a full need college and his EFC of 20k is met in full. Kid 2 will be a freshman next year at Gap U that is not full need but he is named after Great Uncle Hans. Uncle Hans will be paying for his namesake (either through Hans Sr. 529 or by sending a check directly to Gap U.) Hans Sr. is not interested in subsidizing any of the other kids. Kid 3 is a high school junior and likely to also attend a full need school (ignore please that no one knows that they will qualify for a full need school). Is there anywhere on Kid1 or Kid 3’s FAFSA or CSS where the generosity of Uncle Han’s is reported or any other way it is taken into account? Obviously it would be reported on Hans2 FAFSA and CSS assuming he even bothers filling one out given that Uncle Hans is paying
Definitely not reported on the other kids’ FAFSAs. I haven’t completed a Profile in years, but I don’t recall being asked anything like that - although others with more recent experience can weigh in.
No. Income earned or gifts received or assets legitimately held by a sibling, or expenses paid on behalf of a sibling, are not reported on FAFSA or Profile.
Thank you, so if it is a specific bequest to Kid2, it is not considered a gift to the family as a whole? I assume age does not matter either? Whether Kid 2 enters college at 16 or 18 and is 16 when Unc pays?
I don’t know why, if the gift giver has made it clear that the gift is for one specific person, that it would be considered a gift to the family as a whole. Age does not matter. A minor can be given a gift that legally belongs only to the minor. It may have to be held in a different manner (UTMA/UGMA) because of the age of the recipient, but the age alone does not expand the group of recipients.
No, it is a gift to Kid2. As long as the money is paid directly to the college, it is not a “taxable” gift either - Uncle Hans won’t have to file a gift tax return if it is above the exclusion amount. Kid2 should still file the FAFSA, to reduce the amount Uncle Hans ends up paying. If Uncle Hans helps pays tuition this year, it will be considered as income when Kid2 files FAFSA in 2 years (toward his Junior year). Since it is considered his income, and not yours, it will have a bigger impact on his EFC, but none on the siblings.
Note also that as long as Kid2 remains your “qualifying child” you will benefit from the Education Credit based on the money Uncle Hans pays.