If the parent are undocumented by the children are citizens, I have to assume the parents have been in the US for 16+ years. Getting an ITIN is not going to get them “on a path of legal residence”
We can’t recommend your parents file taxes or take any other steps to clean up prior tax issues, and can only tell you what you will need to complete the FAFSA (manual completion of the forms using 000-00-0000 for parents) and what the school will expect for verification (some statement of income and assets, maybe IRS verification of non-filer status).
I am an acceptance agent for ITIN. I won’t go into all of the reasons to have one, because there are many and I urged the OP to read up on all of this. One of them is to get a LetterOf Verifications of Non Filing from the IRS or to file the 1040. The former is likely to require getting some form of proof of income or non income which could vary from school to school But you can only use APPLIED FOR so long in terms of that ITIN. It’s entirely possible that number was required any ways and it does help those who are need proof of residency here. I go over this regularly during tax season. So, yes, I do recommend the OP help get the ball rolling on ITIN. The FAFSA without a tax return is inevitably going to lead to that IRS Letter. I’ve seen this scenario a number of times, so I am familiar with the flow of this.
Agree with @BelknapPoint …this isn’t income on the FAFSA.
Now…if there are bills in the student name and the uncle is paying those…there is a line for money paid on the student’s behalf. But that wouldn’t include clothes and a place to live.
I guess it depends upon the support. If uncle is truly paying support, just like if Grandma is, or a NCP (not as contracted or ordered child support. If it’s all non verifiable money, I guess it would not be. Depends upon the verification process which can vary from school to school. Some are more stringent than others
I don’t see how schools have much (if any) discretion on this. The FAFSA rules are clear. If a FAFSA non-reporter (NCP, uncle, family friend, etc.) is giving the student money to use at the student’s discretion or paying bills that are in the student’s name, that is reportable as untaxed income to the student. Otherwise, no.
If the father is taking care of the family financially, how can the uncle be putting these kids on his taxes?
But that is a whole other question…
As a citizen, the OP can complete the FAFSA…BUT they will need to put every penny the father has earned on this form even under the table earnings. Since there is no tax return, the parent will need to complete a non-filers statement…and this will document the reason why a tax return was not required. However, if a tax return WAS required that’s another story too.
It’s a delicate balance when giving advice and instructions on this board. Yes, a lot of times you can wonder how something can be done legally. Maybe it’s not. And admonishments are certainly not out of place, like the ones I’m getting. Good that they are.
But, we only have a set of facts as given by OP which are:
Parents have not filed taxes
Parents are illegal immigrants
Uncle is claiming OP and sisters as dependents on his taxes
OP and sisters are US citizens
Parents cannot get legal SSN
OP is entitled to financial aid as citizen but must complete FAFSA to get it
The immediate answer to the scenario is
FAFSA still has to be filed with parents ’ Info using 00000000for SSN. The parents would also check the box saying tax return will not be filed
The response from the schools will be swift in that a FAFSA without a 1040 gets an immediate request for verification. I’ve personally seen these responses where I’ve worked where a lot of people do not file taxes. Many of them are US citizens.
If that is the case, the first thing needed is a Verification of Non Filing Letter from the IRS. To get one you need either a SSN or ITIN. So the parents need to get that ITIN or financial aid will be held up. Might as well have it all ready and in place. You don’t get these things overnight from the IRS.
I also am certified to submit ITINs because those without a SSN often find they are far better off with one and yes, having one is useful in any legalization process. That’s a big reason why people apply for them in my area. That and tax issues which I won’t go into.
However, once, the parents have an ITIN , they have the choice of either filing those 2018 taxes which would take care of the FAFSA issue or getting that Verification of Non filing. Either way, they need to list income for 2018 for FAFSA purposes. What Verification the financial aid officers will need at each college will vary. Maybe some will just take what you list as income and let it go. Others will want substantiation I tend to see the ones that want substantiation. Filing the 1040 is substantiation that is not questioned by financial aid. But then other issues come up if the numbers are too low as to how they are even living— yes, they ask that. Because if there is a NCP or grandma or uncle giving undirected child support for the kids, that’s income to the kids That the kids are not dependents on the 1040 could be questioned and had been. I’ve seen it. Not much, but there are fin aid directors who are eagle eyed about these things. . I think I kind of know one because I’ve seen the results of her questions personally though I have not met her.
I think I went down too far on the path of “what if’s” and reasons to do this even as I can see other potential real pitfalls. Hard to know where to stop. But I’m sure that without filed 1040s, the official Verification Letter is going to be needed and to get that from the IRS, you need a SSN or ITIN. How much Verification of the income which has to be reported on FAFSA will occur—YMMV depending on various financial aid officers.
I will ask you again – if an uncle, NCP or grandma is feeding the student, providing clothes and a place to live, how is that reported on FAFSA as income to the student? Specifically, which FAFSA question does that “income” figure provide an answer for, and how is the “income” amount determined?
Same as any cash gift to a child. Money paid or given on your behalf on the student part of the FAFSA.
I saw it come up 4 times this year. Kid claimed by someone else as a dependent, parents have little or no income. 3 out of 4 from same financial aid officer.
Likely vast majority get through without a question and this may be TMO. Not so if applying for fin aid in this type of situation to a certain school
No. The FAFSA question that comes closest to this states “Money received, or paid on your behalf (e.g., bills), not reported elsewhere on this form. This includes money that you received from a parent or other person whose financial information is not reported on this form and that is not part of a legal child support agreement.” Food, clothing or shelter provided for a student by a NCP, grandma or uncle is not “money received” by the student and is not the same as paying bills that are in the student’s name.
In no way is food, clothing or shelter received by a student from a NCP, grandma or uncle considered “income,” either for FAFSA purposes or for IRS tax purposes.
I have personally seen this challenged in several cases. Real people, real cases. Parent has no income , how is kid being supported? Not a made up situation or what if—though in this case has not happened
Sure, an FA officer can question how a student is being supported if parents have no FAFSA reported income, but this doesn’t mean that non-monetary material support (food, clothing, shelter) provided by a NCP, grandma or uncle must then be reported on FAFSA as untaxed income to the student. Any FA officer that requested such reporting would be wrong, as it would be directly contrary to what FAFSA is asking for.
We, on CC, can only tell the student how the forms work and what information could be requested. I don’t think we should be giving legal advice -and IMO telling the parents to file taxes or get a ITIN or taking or not taking dependents on a tax return is legal advice.
You have to file the FAFSA to be considered for federal aid. You aren’t eligible for the federal student loan or a Pell Grant without it. If your Dad works you’ll have to enter his income. You’ll probably have to print the form and sign it before submitting it. Colleges will tell you what additional information you’ll need to provide for verification.
What are your stats? Are there any colleges you can commute to from home to save money?
Unless the rent or some other bill is in the children’s names I don’t see how that counts as income to the students. Food, clothes, and housing aren’t income.
Not quite. If the father earned all of his income under the table, no employment taxes would have been taken out. The filing threshhold for self-employment is $400, and he would owe just over 15% of his net earnings.
@twoinanddone, some of us here work in the tax field, and not only CAN we recommend that they file txes and take steps to clean up prior tax issues, but for some of us it is our responsibility to advise them to do so. They should file the previous years, filing the first one by mail with an application for an ITIN. Having an ITIN won’t put them closer to a path to citizenship, but failing to file taxes would most likely exclude them.
OP, if your uncle lives with you, and earns more than your father, then he is legally entitled to claim you. But it’s your parents’ information that will be used for the FAFSA. As others have suggested, I would speak to someone from the financial aid office at a local college. They will know what needs to be done, and how to help yu get started.
And this is likely why we’ve seen situations like this before. The parents aren’t earning tiny bits of money. The OP indicates that dad works under the table but earns enough to take care of his family. We’ve seen this before. The parent doesn’t want to “make things right” tax-wise because (as you’ve mentioned) he’d owe 15% each year. So, if over the last few years, he’s earned $25k each year, he’d owe in back taxes over $10k.
I truly think that the uncle is claiming the kids simply because his parents aren’t, and they’re thinking, “well, someone should benefit by claiming them”… and maybe uncle gives them a “fair share” from doing so. Not saying that this is legit, but we’ve seen others here with a similar situation. A legal adult relative who’s claiming kids from undocumented relatives.
Anyway, the kid is in a pickle. Unlikely his parent is going to file anything that reveals his true earnings. My concern is that if dad feels forced to file, he’ll just claim he’s earning some ridiculously low amount and claim that uncle is supporting them all.