<p>Hey guys... I have a general question regarding financial aid for the upcoming 2008-2009 school year. </p>
<p>I am a transfer student. For the coming financial aid, I made about $3000, while my parents are retired and made no income.</p>
<p>Is it better for me to file my taxes independently or should my parents claim me as dependent?</p>
<p>Which will give me the maximum award amount?</p>
<p>Thanks guys!</p>
<p>Are you trying to figure out what to do for financial aid purposes. There is a BIG difference between being a dependent for tax purposes, and being a dependent for finaid purposes. Even IF you file your taxes and are independent for tax purposes, it is still highly likely that you will be considered a dependent student for finaid purposes (you absolutely can file your taxes independently and still be a dependent for financial aid purposes). </p>
<p>Also, just because your parents are retired does NOT mean that they have NO income. They probably have some kind of pension, social security or retirement earnings, not to mention probable savings. Otherwise, how would they be paying their bills. That they are retired does factor into your finaid calculations BUT most retirement income (from pensions, for example) is considered income.</p>
<p>As thumper1 indicates, there appears to be two issues, independent for financial aid purposes and independent for tax purposes. These issues are not the same. As to independent for financial aid purposes, see the following link:</p>
<p><a href="http://ifap.ed.gov/eannouncements/attachments/0809EFCFormulaGuide.pdf%5B/url%5D">http://ifap.ed.gov/eannouncements/attachments/0809EFCFormulaGuide.pdf</a> </p>
<p>To be independent for financial aid purposes, there are certain criteria. I am assuming that you are not independent. The govt. and schools really want you to be classified dependent as then they can get their hands into your parents pockets.</p>
<p>Keep in mind that aid packages are often combinations of money from govt. and money out of schools own pocket.</p>
<p>Assume youre dependent; there is a silver lining:</p>
<p>Thumper1 is right, to pay their bills, your parents have some source of income (e.g., social security, interest income, etc). Assuming, however, they have to file a federal tax return, the issue will be whether or not their source of income is taxable income and gets included in their AGI. If their AGI as reported on a short federal tax return is less than 20K, FAFSA will set your EFC at zero and you should be eligible for a lot of federal aid. </p>
<p>However, again assuming your dependent for FAFSA purposes, your parents will still report their source(s) of income on a FAFSA schedule, A, B, C. And when it comes to money directly from a school's own pocket, schools have discretion as to how to treat this parental income. </p>
<p>As to independent for tax purposes: Im not an accountant/CPA. The IRS allows a personal deduction for each person. Parents tend to want to claim their kids personal deduction because parents typically have a higher incomes than their kids and every deduction helps a little. Here, you state, your parents have no income and thus have no use for your personal deduction, so it would be wasted. On the other hand, if you can claim a personal deduction for yourself, you can shield more of your income from federal taxes. However you state your income is only about 3K. Claiming a personal deduction for yourself is probably unimportant, as at that income level, you wont have any federal taxes anyway. So in my opinion, being independent on these facts doesnt make a difference tax wise. </p>
<p>Good luck.</p>