So let me explain my situation. My parents have been divorced since 2011, and I lived with my mom till about 2015. Sometime in 2014 or so, my mom and I opened a joint bank account. For about a year or so, we have been using this account to get payed, pay our bills, etc. But sometime in 2015, I moved in with my dad and opened up a new account for myself at a different bank, and I did not take my name off of my old account. I stopped using my old account for personal reasons. The only time I would use my old account to pay for stuff would be when my mom told me to go to the grocery store and buy stuff for her. I started college in the fall of 2017, and when I was filling out the FAFSA application for the 2017-2018 year, I did not declare the money that was on my old account because I didn’t consider it mine. The money on that account was my moms, but the account was still jointly owned by my mom and me. I put down my dad as my custodial parent on my 2017-2018 FAFSA because I have been living with him at the time. And then in early 2018, I moved back in with my mom. So when I was filling out my 2018-2019 FAFSA application, I put down my mom as my custodial parent. This time I declared the money on my moms account as her asset. And did this again on my 2019-2020 application. I did not declare any of this money as my money because I did not consider it to be my money. So did I make mistake by doing this? Is it possible for me to fix this mistake? Should I contact the department of education? I’m kinda freaking out about this because I’m worried that I may have been breaking the law all this time. I think I can still make changes to the 2019-2020 application, but I’m not sure if I can edit the previous two. Please help. Thanks.
If it’s not your money I don’t see how you can declare it as yours. Is it a custodial account or an actual joint account? If your account is in a different bank you should probably take your name off your mom’s account.
I’m a parent and my name was on one of my mother’s accounts. I didn’t declare that, which was her money. DH was on one daughter’s account and that was not "our"money. The funds were reported as hers.
Others may know the official answers, but I felt I could justify these decisions, if ever questioned.
You declared the money as you mom’s asset when she was your custodial parent. You wouldn’t then declare the SAME money as your own.
When your dad was your custodial parent, you would not have included your mom’s assets. Any money in that joint account that was yours should have been declared. If the money was all your mom’s than the money was all your mom’s…and would not have been your asset.
@kelsmom am I right?
The person whose social security number is listed on the savings account is the person who the money belongs to (and is also required to pay taxes on the earned interest at tax time). So if your mothers SSN is on the account then its not your money and you should not report it on the FAFSA.
@DiscountQueen that is not entirely true. If this student put HER money in her mom’s bank account…the money would still belong to the STUDENT…not the mom (unless the student was giving with no strings attached this money to her mom). If money belongs to the student, it doesn’t matter where it is…it still belongs to the student.
@BelknapPoint would you like to confirm.
it’s a joint account
The money that is yours…is your asset. The money that is your mom’s is her asset. So…if you have $2000 in the account…that is your asset. If she has $2,000 in the account, that is her asset.
Unless you have given all your money to your mom for keeps. Have you done that?
Yes, the money in that account was my moms. However, both our names and social security numbers are listed on that account. So what I am worried about is the department of education going after me for failing to declare money that was on that account.
Nope. I stopped depositing my money to that account after I opened up my own account with a different bank. However, I still continued to use money on that account whenever my mom wanted me to buy groceries for her or something. That account is under my mom’s name and mine. So how is the department of education supposed to tell if that is my money or my moms? What if they think it was my money and go after me for failing to declare it on my FAFSA application.
So what your saying is that as long as none of that money was actually mine, I don’t have to declare it? Again, my name is listed on that account.
This is correct.
A bank account can be held under two names, but the earnings are only reported under one SSN.
If you deposited your money in that account, than it remains your money and needs to be reported on FAFSA as your asset, unless you made a legitimate gift of that money to your mother.
What amount of that money was YOURS left in that account after you opened your own account? Did you use the amount you had deposited in that account up?
Let me give you an example…you are NOT allowed to “hide” asset money simply by placing it in a bank account that belongs to someone else. Let’s say, you had $20,000 in your mom’s account. Do you think it’s Ok NOT to report that money as your asset for financial aid purposes?
I think you’re worrying for nothing. You’re allowed to run errands for your mom using her bank card.
Unless your college picks you for verification when you’re applying for aid I doubt anyone is ever going to ask about it. If you are picked for verification you turn in the papers the college requests. I think they wanted signed copies of our tax returns. I don’t remember them asking about our bank accounts.
Even though your name is on your mom’s account it sounds like the money in it belongs to her. So I think you did the right thing by listing it as hers. I wouldn’t edit your current application or make changes to the other two. When forms ask for the amount in your account you put the money that belongs to you. Can you empty your mom’s account and use it for whatever you want (like a fancy car or a trip to Europe)? If not, it’s not your money and you shouldn’t declare it as such.
It’s a non issue in this case.
But for clarification purposes. Joint accounts are technically and legally 100 percent the property of both account holders.
If you are on the account you can walk in and empty it if you choose. There are other account options that can differentiate ownership. JWROS is the traditional joint account. It’s not just 100 percent yours in life, the right to these funds are also 100 percent yours if the other joint tenant passes away.
In fact being added to a joint account for non spouses is a reportable gift above the annual exclusion amounts. The only reprieve is to deem it to be an account of convenience, in the example of the adult child on there to help a parent. However when that parent dies it’s funny how many times the account of convenience concept goes out the window and siblings get into a battle over the money. It’s really hard to get this reversed. Caveat emptor.
@privatebanker : Why do you maintain that: “It’s a non issue in this case.” ?
(What are you referring to as the “non issue” ?)
OP: How much money is in the joint account owned by you & your mother ?
P.S. Any money held in a joint banking account is the property of each person listed on the joint account unless there is a clearly stated restriction–which does not seem to be present in OP’s case.
@publisher, for financial aid the mom’s money can’t also be the student’s. By your logic, if his mom’s name was the only one on the account OP could keep all his money there and not declare it because his name’s not on the account. @kelsmom can clarify, but I think OP’s money is his no matter where it is. If he doesn’t have any money in his mom’s account none of it is his.
Some are confusing real life rules with fin aid reporting. If it’s mom’s money, report as her asset. If 50% is mom’s and 50% OP’s, then the proper assets for each are reported. Not totals.
Privatebanker is giving the legal definition of a joint account. Both parties own 100% of the account. That doesn’t mean there is double the amount in the account, just that each owns 100%. Legally the money in a joint account isn’t partly yours or your mother’s, it’s all yours and all hers. The bank doesn’t hold it separately and doesn’t care who deposits money -either can take it out.
The IRS only expects one of you to report the interest, but it would happily garnish the entire account to cover a tax bill and you would have a claim against the other party for your portion. The bank doesn’t want to be involved, just like it doesn’t want to be involved when one sibling takes all Mom’s money and the siblings say 'But Mom said you would share!" The law says the bank can pay the entire amount to the joint account holder and the sibling are SOL.
FAFSA reporting doesn’t go looking for accounts. YOU report them. If you feel the money in the account was reported correctly, then you’re okay.
Assume a student and a custodial parent are joint bank account owners. If this standard is used for need-based financial aid purposes, 100% of the account funds would be reported as a custodial parent’s asset and 100% of the account funds would be reported as the student’s asset.