Financial aid question, as it pertains to child claiming him / herself on taxes...

Well if she earned a good amount of money and didn’t use it for her tuition, that’s up to her. That would be one way to reduce the loans.

Another way to reduce her loans would be if you contributed more to the school costs.

But based on your income and her being dependent for financial aid, she would not qualify for more aid if you didn’t claim her on taxes.

When you figure the support you divide rent, utilities, food, insurance by all the people in the household. You don’t just pay the expenses for her, you also live there.

Yes, she’ll graduate next spring.

Her tax filing status has NOTHING to do with financial aid…and never did. As long as she is an undergrad, under age 24, not married, not an orphan, not a parent of a dependent child…and not a veteran of the armed forces…oh…and hasn’t been a ward of the state…

Tax filing independent status has NOTHING to do with independent financial aid filing status.

YOUR parent income and assets would be required on the financial aid forms. So…you lost nothing over the last few years.

She didn’t earn a good amount of money, she earned enough money to keep her car running and be a 22 year old kid, in NY, that’s pretty much it.

Well, I was going by the $8-12k you mentioned.

To me that seems like a lot for a full time college student working part time.

So does she pay for her gas, car insurance as well?

I have been independent for tax purposes since I was 18. I still had to file as dependent for FAFSA (which in my case actually worked to my advantage but I’m an extreme outlier).

Simple answer is no, she cannot file FAFSA as an independent if she is under 24, not married, etc. There are a handful of ways that you can be independent under 24 but she doesn’t fit any of them based on what you’ve told us.

For tax purposes, can you maybe work out a deal with her that you can pay whatever she owes and you still get to claim her? With an income that low, she should owe very little.

“Well if she earned a good amount of money and didn’t use it for her tuition, that’s up to her. That would be one way to reduce the loans.”

She doesn’t earn a good amount of money, so that would be difficult for her right now.

“Another way to reduce her loans would be if you contributed more to the school costs.”

I can’t, I’m barely staying afloat with everything else on my plate.

“But based on your income and her being dependent for financial aid, she would not qualify for more aid if you didn’t claim her on taxes.”

That’s what I thought but I was trying to get to the bottom of this because she mentions it every so often.

“When you figure the support you divide rent, utilities, food, insurance by all the people in the household. You don’t just pay the expenses for her, you also live there.”

So wait, I pay $1700 a month for rent for a tiny house that my wife, step-daughter and I live in and I can’t put the whole thing on my step-daughter?

"Well, I was going by the $8-12k you mentioned.

To me that seems like a lot for a full time college student working part time.

So does she pay for her gas, car insurance as well?"

Well I gave a ballpark figure, I’m certain she makes well under $10,000, maybe under $8000 too.

I can’t afford a car payment for her, neither can she, but she has a relative that makes the payment for her car. She handles the insurance and gas if I’m not mistaken. I don’t ask too much because I don’t want to be nosy, she may not like that.

  1. Your daughter could file her income taxes herself...with you not claiming her. This has NOTHING to do with financial aid at all.
  2. Your daughter is dependent for financial aid purposes unless she meets the requirements on the FAFSA for not...and that is NOT the case. So...regardless of how she files her taxes....YOUR financials were required on her financial aid forms.
  3. No...you can't use the full amount of $1700 a month rent. And say it's JUST for your daughter...because it's NOT. Fact is...you would be paying the same amount if she lived elsewhere. BUT you can use a reasonable amount as her share.
  4. Your undergrad daughter is living with you. You are providing room, board, and health insurance. She is an undergrad college student under age 24. I believe she can be a dependent for tax purposes.
  5. If YOU don't declare her, you will lose the AOTC...assuming you are eligible for any of it.

“1. Your daughter could file her income taxes herself…with you not claiming her. This has NOTHING to do with financial aid at all.”

I know that, but that would not exactly be fair to me considering that she lives here and pays no rent.

“2. Your daughter is dependent for financial aid purposes unless she meets the requirements on the FAFSA for not…and that is NOT the case. So…regardless of how she files her taxes…YOUR financials were required on her financial aid forms.”

THIS is ALL that I really wanted to confirm. She has this idea in her head that she would owe much less in student debt if she could claim herself on her taxes.

“3. No…you can’t use the full amount of $1700 a month rent. And say it’s JUST for your daughter…because it’s NOT. Fact is…you would be paying the same amount if she lived elsewhere. BUT you can use a reasonable amount as her share.”

I knew that, I was being sarcastic. Have I given you any reason to believe that I’m a dummy?

“4. Your undergrad daughter is living with you. You are providing room, board, and health insurance. She is an undergrad college student under age 24. I believe she can be a dependent for tax purposes.”

Yes, of course. But I think she believes that she would owe less for school if she did not have to mark off that she can be claimed as a dependent on somebody elses (my) taxes…when doing her taxes.

“5. If YOU don’t declare her, you will lose the AOTC…assuming you are eligible for any of it.”

Yes, I know, that’s part of why I want to keep things as they are.

The point is not a deal or a choice on who claims the exemption on the taxes.

There are clear rules.

So you would have to figure out how much her total expenses are. Car expenses, college expenses, share of housing, food, health insurance. Cell phone, clothing.

And how much she contributed from work income, student loan.

And how much you contributed.

https://www.irs.gov/publications/p17/ch03.html

Here is more info

https://www.irs.gov/publications/p17/ch03.html#en_US_2016_publink1000170907

And support test

"The point is not a deal or a choice on who claims the exemption on the taxes.

There are clear rules.

So you would have to figure out how much her total expenses are. Car expenses, college expenses, share of housing, food, health insurance. Cell phone, clothing.

And how much she contributed from work income, student loan.

And how much you contributed."

We are a barely making it family right now. I get help from a friend. My wife just finished her degree and has yet to find a job in her field.

I cover what I consider the essentials. Rent, utilities, food. Health insurance is provided by my employer.

She gets help with owning a car from another relative.

She does not buy clothes too often, but as far as I’m concerned, when you buy brand name stuff to look fabulous that is kind of a luxury.

College is paid for with loans.

She pays for her portion of the cell phone (a phone is essential, a smart phone with data is kind of a luxury)

Her relatively small income goes towards keeping her car going, cell phone and doing things with friends…I imagine that’s all she can do on her part time work income.

You don’t get to decide whether your daughter can claim herself as independent. The IRS has a definition of a dependent. Your daughter either meets that definition or she doesn’t.

@roethlisburger

The student can declare herself on her taxes…and parents can delete her…really at any point.

To keep her as a dependent, the kid needs to pass,the dependency criteria.

We’re NYS residents. A $75k income will likely not qualfy for a Pell grant and will only make your stepdaughter eligible for a small NYS tuition (TAP) grant (~$1,000/year if not less). She can only borrow $7500/year as a junior and senior. That gives her $8500/year. If you apply for a PLUS loan and get denied I think she can get $4k/year more. That gives her a total of $12,500/year. I think that’s the absolute max she can borrow per year on her own. The max loan for 2 years would be $25k, not $50k. The only way she can get $50k in loans is if you and/or your wife cosign. If your wife cosigns, I’d find out what your responsibility is if the $50k is defaulted on. As her spouse, you may be responsible.

If you’re supplying more than half of your stepdaughter’s support, you can claim her as a dependent. She won’t qualify for aid by claiming herself. If she thinks so, she’s been misinformed. For the FAFSA she’d have to be 24 to qualify as an independent; for the TAP she’d have to be 35. She’s not married or in the military, so she doesn’t qualify for special circumstances. If you’re paying $4k or more a year for qualified educational expenses (tuition, fees, books), I think you can claim the American Opportunity Tax Credit (AOTC) too, but you’d have to claim her as a dependent.

The maximum federal student loans over 4 years is $27k. They can borrow $5500 as a freshman, $6500 as a sophomore, and $7500 each year as a junior and senior. If she has $50k in loans, or will by the end if next year, I’d find out where that money is coming from because I think that somebody other than her would’ve had to sign for $25k-35k of it.

@thumper1

The instructions for the 1040 read if someone can claim you as a dependent, not if someone did claim you as a dependent. Just because a parent fails to take an allowed exemption doesn’t mean the daughter gets treated as independent on her tax return.

The daughter can file a tax return and get her standard deduction, but to claim her personal exemption she would have to be eligible to do so.

If someone else is eligible to claim her, then she can’t claim herself.

The rules are in IRS publication 17 in the links I posted above.

@Madison85 is that correct?

@mommdc

Yes…correct!

Sorry.

BUT for financial aid purposes…this doesn’t matter.