<p>My daughter's grandparents would like to contribute directly to her college. Will this change her financial circumstances in their eyes? I thought it was better to have one person/account paying instead of multiple accounts. I am a single parent so I do not want to mess up my status, which isn't so great anyhow. Her father said he may contribute here and there as well. This may be worse than the grandparents. I don't want to confuse the college cashier. As you may remember, my EFC is close to 18,000. Thanks.</p>
<p>Don’t worry about confusing the college bursar’s office, they’ll be happy to take money for your daughter no matter how it comes in :)</p>
<p>But do be aware that money paid on behalf of a student by someone other than the parent is considered *student * untaxed income for purposes of FAFSA, and so must be reported as student untaxed income on the following year’s form. So if the amount is greater than the student income allowance of approx $5000, then this will have a significant effect on your EFC calculation the following year.</p>
<p>I was advised to have the grandparents gift the money to the parents not the child. Another option is to have the grandparents loan the student money, rather than gift it to them. This would not affect the fafsa calculations. The grandparents can then choose to forgive the loan upon graduation if they so choose.</p>
<p>Well, it sounds like I should receive the money and then wire one amount. I thought that a grandparents’ 529 for a grandchild is not factored into the child’s income and FAFSA. This money is not included on any financial aid form. Are you sure the money is factored back into the child’s income? If that’s the case, I will have to send out from my account.</p>
<p>Grandparent-owned 529s are not reported as assets on FAFSA.</p>
<p>Money paid on behalf of the student by someone other than the parent is reported as untaxed income to the student on FAFSA.</p>
<p>what ever happened to grand parents giving a check to the parent who deposits it in their checking account, then writes a check to the school. Are people serious about reporting a gift from grandparents? Don’t tell the school about it. Please use common sense people.</p>
<p>My son’s grandparents are writing the check directly to the school so they can avoid paying gift tax.</p>
<p>Since the grandparents have a 529 for my daughter, then all the money that leaves the 529 can be tracked. Even if it goes to a parent’s account the to the school, it leaves a trail. It will always be student income. This is too bad as I just had the money moved (a couple of years ago) out of my daughter’s name. It was in an UTMA account then. So, it still is attached to my child’s name. It will not show up in the first year I file FAFSA, but it will next year. Ugh.</p>
<p>If this is a custodial 529 (also known as a UTMA/529) in your daughter’s name, then it’s a reportable asset for FAFSA. Whose social security number appears on the account? </p>
<p>The usual way to move funds from a UTMA to a 529 is via a transfer from one account to another where both accounts are titled the same way. UTMAs are typically titled with parent as custodian, child as owner when he/she turns 18 or 21. Custodial 529s maintain the same title; parent is custodian, child is owner. These are child-owned 529s, as opposed to the more typical parent-owned 529s where parent is the owner and child is the beneficiary. </p>
<p>My broker would not allow a transfer of UTMA funds to any other type of 529. I could not have transferred to a grandparent-owned 529, for example. It was fairly easy to transfer from a UTMA to a new child-owned 529. The net result is that the new 529 is reported as a parent asset on FAFSA, whereas the original UTMA would have been reported as a child asset. Parent assets are counted at 5.6% while child assets are counted at 20%.</p>
<p>The account USED to be in my daughter’s name. I paid the taxes on the money on my 1040. After reading here re financial aid, I told them to tell their financial advisor to move the money. I only got one email saying “the money has been moved to a 529”. I do not pay taxes on that money anymore. I have no idea who pays taxes or gets a deduction. This is in Maryland. Now, I am really confused. I have done what I thought was the right thing to do. It was also mentioned that my daughter’s father is on the account, but as far as I know her grandparents own the account for her benefit. We are divorced so his information is not included in the FAFSA papers. They are very well to do so hopefully their CPA would tell them what to do with the tax information on this account. Gee, the last people I want a problem with are the IRS.</p>
<p>No one pays taxes on funds in a 529. Maryland does give a tax deduction when funds are invested in a Maryland-specific 529; that deduction should probably have gone to your daughter.</p>
<p>UTMA funds are “for the use and benefit of the minor.” While it’s not technically correct to move them to a 529 owned by someone other than the minor, as long as all of the money that was in the original UTMA is now in the 529 and will be used for your daughter’s college, you should be fine. The IRS doesn’t tell you exactly what to do because much of the UTMA/UGMA law is left up to the states.</p>
<p>Here is more detail on the effect of a transfer from a UTMA to a custodial 529. If all of this is consistent with your situation, then there shouldn’t be any problem with the account.</p>
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<p>[Transfers</a> to Section 529 Plans](<a href=“http://www.fairmark.com/custacct/529plans.htm]Transfers”>http://www.fairmark.com/custacct/529plans.htm)</p>
<p>if grandparents loan the money and then forgive the debt, as fishymom suggests, does there need to be any paperwork or can it be a verbal agreement?</p>
<p>and should the grandparents then deposit the loan money into child’s account or pay school directly?</p>