<p>Many people have had to live separately in the past few years because they need to go where the jobs are. They are not “separated” in the pending-divorce sense; they are separated because they need to be so in order to earn money. I did not read anything to lead me to believe it was anything other than this situation in the OP.</p>
<p>If this is actually a pre-divorce type of separation, the rules are exactly as they are for divorced people. The IRS rules for being considered unmarried are not relevant here (they influence allowable filing status). The income and assets of the parent with whom the student has resided for the most recent 12 months as of the date the FAFSA is files are used. The tax return from the base year, if filed jointly, is reworked to include only the FAFSA-parent’s income, one-half of any non-work income/deductions/credits (and if the amount of itemized deductions does not exceed the standard deduction for that parent in the new situation, the standard deduction is used) - and the deductions and filing status on the form must be reworked to reflect the new situation. If the other parent paid child support or alimony, those amounts must be reported in untaxed income.</p>