Lying on FAFSA, and admitting to colleges applying to

Paying for College
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<p>Ok, I know I should grit my teeth and not think about it, but here goes....</p>

<p>I know someone (close family member), who first, was irritating me because she kept calling me and asking me about colleges. Then, she would overrule what I would answer by saying something else is correct. She went to look at expensive colleges that we could never afford, and we have actually saved for our children to go to college. In her case, she is one of those people who has to keep up with the Joneses, spends a lot, defaults on credit cards, etc. She has no savings at all. To top it off, her daughter did not even make an average score on the PSAT and is in the bottom half of her class. She is in 1 EC, cheer, which she frequently is not allowed to cheer anyway because she is usually flunking a class at any given time. </p>

<p>I never pointed out her child's difficulties in school, or that some of the schools that she is looking at would be extreme reaches, even though they are average schools. I did bring up the Net Price Calculator. But this family member told me she was going to ignore those because she would rather be in denial. </p>

<p>But then, tonight, she calls me and wants to talk about stuff again. And in the course of the conversation, she told me she plans to lie to the college and claim she and her husband are separated and she has no access to him or his assets, maybe doesn't even know where he is. And she is going to file separately on the taxes to try to back this up. Fact is, her husband works where she works. I would think that would get checked and she could get in big trouble. </p>

<p>Now, I just feel a bit ticked. I figure any financial aid office would catch on to this and she would not get away with it. I am guessing there might even be consequences. I do not think her daughter cares. The impression I got was that her daughter doesn't want college anyway, it is her mom pushing it. Plus, I have suggested community college as a less expensive alternative for the first couple of years, but she says she would never have her daughter go there. (her daughter is apparently too good for community college)</p>

<p>To top it off, she wants to know where my next child is applying, and I am not telling. My daughter, my husband, and I all agree that where she is applying is to be kept private, and once she is admitted and the decisions have been made, we will tell. Picking a college is like naming a baby. Everyone wants to have a say, they will ruin your choices for you and pressure you, and they actually feel entitled to this. Plus, she is applying to some reaches that she would love to attend, but, might not get in to. Others do not need to know where she was rejected from. Mostly, we just list off some colleges that are state universities, knowing those are the safety school choices, and let it go at that. </p>

<p>Really? How do you deal with someone like this? Is this a common problem? I do not want a big blow up, but enough is enough. I think I will just keep my distance and hope she doesn't call about it again soon.</p>

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<p>Lmkh70…gotta say…you sure do have lots of problem people and situations!</p>

<p>This is a MYOB situation…don’t discuss this any further with this person. If they ask, you can tell them that lying on the FAFSA is considered FRAUD and their kid could lose not only any financial aid offered, but also their admission offer. And this could result in a hefty fine.</p>

<p>But really…they are not going to listen to you.</p>

<p>If its any consolation…you need to know…their tax filing status is MEANINGLESS. It has nothing to do with financial aid status at all.</p>

<p>Unless this kiddo is brilliant enough to get into one of the highly competitive schools that meets full need, none of this will matter anyway. The remaining schools do not guarantee to meet full need and they don’t! If the mom is working, the kid will likely not even qualify for a Pell grant. so all she might see is a Direct Loan.</p>

<p>You now have this info…but…personally I still say…stay out of it. This is one of those lessons they will have to learn themselves.</p>

<p>Plus, you need to distance yourself from these problematic people!</p>

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<p>Tell her to join CC and ask all her questions here. All the kind parents here will be happy to set her straight. Then she can blow up at us and not at you.</p>

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<p>The FAFSA is now linked to SSN/tax returns. If she and her husband live at the same address, her lie will be caught. So no worries. Oh, and whatever award she gets will probably be reduced or rescinded. Don’t tell her. Let her find out for herself the hard way.</p>

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<p>This will be interesting to see as to what happens. I agree- you need to distance yourself from someone who is causing a lot of trouble.</p>

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<p>I also say avoid, avoid, avoid. You don’t need this kind of stress. Just always be doing something else, or gee I don’t know, or change the subject. Don’t let it bother you, things always catch up to people like this.</p>

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<p>If a couple who is not separated is filing as such on the IRS returns, the risks and penalties are quite severe if caught, including possibly jail time. Not something to play around with. The FAFSA part pales in significance to the IRS fraud that is being perpetuated. Yes, FAFSA will rely on IRS info and yes, there are people who cheat on their taxes. Some do get away with it. Some people steal, and break the law in all sorts of ways, and some may not get caught. They might even murder the old lady next door or their own parents and get money that way. Yes, it happens. If they do get caught, the ordeals and penalities can be severe.</p>

<p>What your family member has to gain from this is likely not all that much. If she claims she is making Zero money, it is highly likely that the school will request some verification on what she is living on, and the IRS may come sniffing too, but even all passes muster, you are talking $5600 in PELL Grants with a zero EFC, that is the maximum for the year, and subsidies on the Direct loans (reduced interest rate, interest not accruing unti graduation) as the entitlements. The rest is all up to the schools, and usually there isn’t a lot of money dispensed from FAFSA only schools. The schools that tend to give a lot of money require a PROFILE form and both parents’ incomes and assets are used, whether separated, divorced, never married when it comes to getting aid from them. </p>

<p>Now I have a friend who did get the max out of the system and did it legally, by planning for it since the ex husband knew exactly how the aid worked. But there is a price paid, always for this sort of thing. The kids did not get to go to any of the private schools to which they were admitted since Dad wouldn’t pay and Mom couldn’t. And there was risk involved that the whole house of cards could come down. But ,yes, those kids got zero EFCs, got the full PELL, some state money, subsidized loans and some university money due to all of that. But none of the privates schools would give them a dime more than the federal entitlements which didn’t come from the schools anyways and they could get for any school. If that 's what someone wants to do and plans for it ahead fo time, that’s fine. But the tax fraud your relative is thinking of doing is a whole other issue. Truly playing with fire.</p>

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<p>One of those cases where chances are high she will get her own, in the end. There are ways to (try to) manipulate fin aid and she is picking the one most likely to fail. If you continue supporting, you will either get the tsunami of tears, later, or be somehow blamed for inaccurate advice.</p>

<p>If her kid is applying this fall, she’ll need both 2013 and 2012 tax forms.</p>

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<p>Really, people shoplift, steal, cheat on their taxes all of the time. Nothing new here. They take the risk. Sometimes they do get away with it. I’m surprisedt that the greater issue fo tax fraud is not the main concern. Seriously, you can do some time for that one.</p>

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<p>Any married couple can file taxes separately if they want. There’s no problem with that though in almost all cases the couple makes out worse financially doing so. One or both filing as head of household would be a problem. But here the person is proposing filing separately to support finaid fraud. The finaid fraud is the problem.</p>

<p>Edit: Married filing separately status wouldn’t support the fraud so the person must be proposing filing as head of household. Filing as single wouldn’t make sense financially.</p>

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<p>It’s not the married, filing separately status that is fraud, and is of great benefit. If you claim you are separated on the last day of a filing year, you file as a single person, or head of household, and, yes, it can make a huge difference. If I worked things out and did, that and split our household income to the most beneficial split, I could save a lot in taxes, even without the head of household designation. There is that marriage “tax”, for starters. It also puts a lot of the income into a lower tax bracket. It can be very beneficial, but it is fraud if is being done to avoid taxes which the IRS is well aware of . But, yes, filing as two singles would save us a lot in federal and state taxes. If indeed, DH and I were to separate, there would be a tax benefit.</p>

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<p>Because I wouldn’t want a family member (even an annoying one) to get in trouble, I would try to explain the dangers and possible penalties of committing fraud. After that, they are on their own. There’s a good chance, based on what you said, that they won’t listen but that’s not your problem. All you can do is try to dissuade them from doing it.</p>

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<p>As a family member please advise her not to lie on her FAFSA. You are required to list both parents SSNs and there are some checks that are run to flag this exact situation. I think its likely she will trigger a FAFSA audit. This could lead to legal problems and would certianly mess up her kids college plans. </p>

<p>Certianly in your right not to share plans with others, its personal information.</p>

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<p>Most private colleges will require the CSS Profile and all of the financial information for both parents.</p>

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<p>This sounds like a lose-lose situation. She asks you for advice. Then ignores it. In this scenario its possible she’ll blame you if she gets caught because you didn’t tell her not to. I’d get out of this situation, tell her that her plan is not appropriate and that you do not want to hear another word about it.</p>

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<p>The IRS ploy is truly fraud and is the part that is going to be of issue. The colleges will use what is on the returns, and in fact, it would be a flag if a family did not. The two have to jibe. So if this person has been fraudulently been filing as as separated with her own return, with husband doing the same, therefore avoiding the marriage tax, not to mention getting the head of household goodies, she and her husband would HAVE to file FAFSA as such to be consistent. The FAFSA and the tax returns have to match up. The school isn’t going to care unless that is indeed the fact because they don’t have investigative departments. But the IRS…, that’s a whole other story. </p>

<p>You take a family who is in a tax bracket where a lot of deductions are being lost due to high income. Split that income so one parent can get those goodies, and also lowering the income in the highest marginal tax rate, you can bet your IRA that it will mean lower taxes. Heck, i can save a nice piece of change that way. But it’s fraud. You can also rob a bank, embezzle, steal in general and make money. But it’s criminal to do so. You can go to jail if you are caught, and this is something on the IRS checklist because it can be so beneficial.</p>

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<p>Again, lying on the FAFSA is the least of all of this. It’s the lying on the tax returns that is big time fraud issue punishable by hard time. I doubt the family member was doing this to be eligible for more aid from college that likely is not even going to happen or is negligible since most schools that use just FAFSA do not meet full need and the amount for PELL means a very low EFC. It’s the saving in taxes over years that is driving this, I am willing to bet. And now that a kid is off to college, they have to file the FAFSA to be consistent with the way the taxes have been filed. That there is that year difference so one can report the actual tax numbers between FAFSA submission and the 1040 year, means that those filing FAFSA have to use whatever was done tax wise. So, the crux of the situation is with the taxes, not the FAFSA and financial aid.</p>

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<p>Yep…if they are married, they have two legal tax filing options…married filing jointly, married filing separately. If she thinks married filing separately will help…she is wrong. </p>

<p>She cannot legally file taxes as single or as head of household unless she is divorced. </p>

<p>As noted upstream…there are checks and balances in place to find these things. And fraudulently filing taxes could be a huge issue, not to mention that to get financial aid, the parents will both have to amend their taxes if they incorrectly filed If they lied on the FAFSA also…huge issue!</p>

<p>This could seriously mess up the kid’s college plans.</p>

<p>BUT, I would STAY OUT OF IT. This is a lesson they will have to learn on their own.</p>

<p>And as noted upstream, the MOST in federal aid they could hope for is a $5500 Direct Loan as it does not sound like moms income would qualify them for a Pell…and the kid’s stats are not sufficiently high enough to get accepted to schools that meet full need with institutional funds.</p>

<p>Stay out of this…stop discussing college with this person. With regard to your own kiddo just say “she isn’t sure yet what her college plans will be and we will let everyone know when she makes a matriculation choice on May 1.”. Then WALK AWAY!</p>

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<p>Cpt…I might have missed something…but I believe this family Is PLANNING this “tax filing” for 2013 for financial applications for the 2014-2015 school year. I don’t believe they have been doing this to save on taxes for past years. But then…maybe I missed that in the OP.</p>

<p>Even so…filing fraudulently on the taxes will be found out easily enough…and the jig will be up.</p>

<p>I can’t imagine screwing up my kids college plans this way.</p>

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<p>Actually, someone who is in the "separated’ Category can legally file taxes as single and/or head of house hold. You do not need a divorce decree to do this. When you are living in separate residences and are no longer together has a couple, you can do this. This is usually as a prelude to a divorce, but not always. But if investigation shows that the couple indeed are living together and this is just a ploy to pay lower taxes, it is tax fraud. My guess is that the one parent is claiming another residence as where s/he lives so it appears they live separately.</p>

<p>I know couples who have done this who have two residences. Some have been nailed when the IRS sees no evidence that they are separated even when living apart. Just living apart doesn’t cut the mustard here. THe couple have to be truly living two financial lives and when audited that is what they look for. Because, yes, this is a favorite ploy for those who have enough money where it can mean a significant tax savings. The lying on the FAFSA is really incidental in these cases in terms of consequences. The IRS fraud is of issue. </p>

<p>There are a lot of families who are not legally divorced; the decree is not final, or neither party has filed for divorce officially yet, but they are separated. That is what this category is for.</p>