Lying on FAFSA, and admitting to colleges applying to

Paying for College
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<p>If they have been filing as separated for several years, they have saved a lot in taxes, most likely. I can tell you that we would. Working for the same company one can even decide how to split the incomes the most beneficial ways so that tax credits, earned income status, etc are the most beneficial.</p>

<p>For financial aid? Well, the only grant that is guaranteed is PELL and with a zero EFC, that is $5600. I don’t think most people are so savvy about fin aid that they are going to try to game this --I only know one person who has done this and they did it legally. But to be legally separated (and that’s according to the state definition and some states are wide open about this) one can really net a lot of money. Seriously, what do you think will be gained in having the parents just file as separated in terms of fin aid? The most I see is eligiblity for work study maybe and some subsidized loans. If the income is so low to be PELL eligible, a college may want to see where the income is coming from to support the life style. </p>

<p>On the other hand, I do know folks who are “separated” for tax purposes. Makes a huge difference in taxes. And whatever benefit comes down the FAFSA pipe is part of the goodies, but really, such couples cannot file FAFSA as married without running into verification snags if the federal taxes are being filed as separate singles. </p>

<p>My friend was separated for a number of years before the actual divorce for health insurance, social security and a number of reasons. In her state, one can be deemed separated without doing much of anything. Just having separate residences and separate finances will do it, and that they had. It was also a great for tax purposes, since the money he sent her was diverted to her income and out of the top marginal tax rate of his. She got the head of household designation, because he made so much money that all of his exemptions and a lot of the deductions were phased out or eliminated at his income bracket, so she took on those expense and took the deduction. Their being separated meant about $20K less that had to go to Uncle Sam and even more of a savings since state taxes came into play too . Also her income was low enough that some finacial aid was available for the one kid who did go to a state school. The one who went to the private, nope, not a dime of aid, since dad made a lot of money. But even the non state school kid got loan subsidized and work study since the FAFSA EFC so warrented it, thought the school wouldn’t give any of its own money for aid.</p>

<p>If the family is PLANNING this for 2013, they are commiting fraud for tax purposes and yes, it will benefit them likely more in that venue that in school fin aid, and the “separated” designation would depend on the state definiton. I believe, Texas, PA, DE, GA, MS are some states that won’t have it. You are not considered legally separated. Other states just require you to live in separate domiciles and as separated people. No state will condone it if examination shows its just for tax purposes you are doing this and you are not really living in a separate domicile or only for work purposes and you are in each other’ s lives as a married couple. And, yes, the IRS does check on suspicous such cases (when the money is enough to warrent a check).</p>

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<p>I no longer know how accurate finaid.org is, but they note:
“The definitions used by the US Department of Education and the IRS are not perfectly aligned, so it is possible that an apparent discrepancy will be resolved with no changes. For example, the IRS generally considers an informal separation (as opposed to a legal separation or divorce) to still be married and eligible for filing under either married filing jointly or married filing separate statuses. On the FAFSA, informal separation, legal separation and divorce all qualify for separated status. If the family claims to be informally separated, the school will want to see documentation that the couple did not cohabit (i.e., maintained separate residences), as no states permit a couple with an informal separation to continue living in the same house.” (But my bro and sil live in the same home and are supposed to be legally separated-?)</p>

<p>But, if this is a family keeping up with the Joneses, I agree with SV Mom that the Profile is going to catch up with them. Don’t know if it’s already been said, but sounds like she’s under the same misconception so many are: that FAFSA EFC determines aid.</p>

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<p>They may get away with it. People do get away with cheating and criminal acts all of the time. It’s the risk and the consequences that go with them that are the of issues, since clearly in this case , the moral, ethical, right thing to do is not of any importance. </p>

<p>I agree with those who say, that this is not something the OP should be getting involved with. I would want no part in abetting or even just watching someone doing these sort of things.</p>

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<p>OP, I would simply tell your relatives that you don’t know enough about the ins and outs of financial aid and the specifics of their financial aid to give them any advice…and then I would give them a book like Financial Aid for Dummies or some such, and leave it at that.</p>

<p>After that I would consistently plead ignorance and tell them you can’t give them any advice…</p>

<p>No matter what you tell them, it’s going to be held against you, so you are in a no win situation. So I would not tell them anything at all.</p>

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<p>OP, I agree with the people who have suggested that you not get involved in this. But regardless of what the parent may be planning with regards to reducing college costs, I think your remarks about the daughter were unneccessary and sounded mean. I don’t think the daughter’s scores or success in cheerleading are relevant to the concern you had about the FAFSA. The tax filing issue would be no different if their daughter was the valedictorian. And since you want privacy for your child, I think you should offer the same to another student in your extended family.</p>

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<p>This is a sibling from my birth family. She has cheated on her taxes before, because she asked me for help on her taxes before and when I saw, she had faked a bunch of deductions. I never looked further, nor did I look at other years on hers, it was just that year.</p>

<p>But the thing she is planning to do is not really tax fraud as it is FAFSA fraud. She is planning to claim that her husband is gone from their lives, they have no clue where he is, therefore, cannot provide any information on him for FAFSA purposes, in hopes of raising the financial aid. However, not only does he live at their house, and she does his taxes, but he works where she works. </p>

<p>I really need to distance myself from my birth family. I spent part of the summer with my real family and it was so wonderful to be back with them. But unfortunately, my husband’s job moved us here years ago. Also, I know these people well enough to know that when things do not go well for them, they point to me. I am the outsider. Sort of family, but sort of not.</p>

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<p>Why are you allowing yourself to get sucked into this? Follow your nose. It smells bad. Stay away. Agree with boysx3. Good advice.</p>

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<p>Let it GO! The only guaranteed aid this student will get is a $5500 Direct loan…and everyone can get that regardless of marital status, tax filing status, or ability to find or contact a non-custodial parent.</p>

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<p>In addition to criminal and civil penalties, any aid that is received through lies or fraud can be required to be repaid.</p>

<p>Another way around this situation is to talk honestly to the student one-on-one about options that may better fit her situation academically and financially.</p>

<p>Not only is this situation wrong, but it sure sounds like there is a high likelihood of getting caught.</p>

<p>(Ethics is when you still do the right thing, even when you know no one is watching)</p>

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<p>I would not talk directly to the student. The college application process is their family’s issue. There is a strong likelihood the student doesn’t even know about this ploy, and will go directly to the parents with the story and who shared it. It’s a family mess waiting to happen. Just MYOB.</p>

<p>It is awful, for sure, but stay out of it…this OP has enough “drama” in her life as it is. Just keep out if this one.</p>

<p>P.S. what kinds of “fake deductions” can one claim…unless she is self employed? Or is deducting work related expenses which are very often added back in as income by colleges.</p>

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<p>Someone I know admitted to me in a casual conversation that she claims her ex is dead on the fafsa forms. Her third is in her second year of college now and they’ve never been caught.</p>

<p>Some people seem to go through life getting away with horrible things with seemingly no consequences.</p>

<p>If I looked cross eyed at the IRS I’d probably be audited for the rest of my life. </p>

<p>But fear of getting in trouble isn’t what keeps me from doing illegal and immoral things.</p>

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<p>FAFSA only uses the custodial parent information so it doesn’t “matter” whether her ex is dead or not if the child lives with mom anyway.</p>

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<p>Good catch Cap! FAFSA doesn’t give two hoots about former spouses…dead or alive!</p>

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<p>The problem with these people who are stupid enough to talk about doing these illegal things is that you never know when they are talking and when they are posturing. I 'd just shut down this area of talk.</p>

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<p>Not quite. The IRS definition of “not married” does not depend on a legal divorce or separation nor does it depend on which state you live in. At least not according to the IRS:</p>

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<p>[Publication</a> 504 (2012), Divorced or Separated Individuals](<a href=“http://www.irs.gov/publications/p504/ar02.html#en_US_2012_publink1000175857]Publication”>http://www.irs.gov/publications/p504/ar02.html#en_US_2012_publink1000175857)</p>

<p>But I agree with everyone who said just stay away.</p>

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<p>I don’t know why anyone would - FAFSA doesn’t ask for info about anyone’s ex. The noncustodial parent doesn’t matter at all…for FAFSA.</p>

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<p>I’m not sure if anyone has said it yet, but lying on the FAFSA is perjury. Perjury very well may strip your friend of all possibilities for financial aid in the future. I’m not entirely sure, but it also may lead to jail time.</p>

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<p>Lying on FAFSA for financial gain is fraud. It can result not only in loss of the aid received but also loss of admission to college. And there can be a hefty fine, plus required repayment of money disbursed.</p>

<p>I’ve never heard of FAFSA fraud resulting in jail time.</p>

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<p>I would tell her very clearly that what she wants to do is considered fraud, and you want nothing to do with it. Then, discuss weather, fashion, religion, politics, or any topic other than college or financial aid.</p>

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<p>As the great leader, Snoop Dogg would say “Drop it like its hot.”</p>

<p>In all seriousness, drop it. Dont talk about it, ignore her, dont even dignify her with an answer if she keeps talking about it. Seems like the kiddo doesnt have the grades to get into the school anyway. </p>

<p>If you get involved, the flames might spread to you. Be careful.</p>

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<p>She doesn’t want advice, so don’t give it to her - distance yourself. The questions and requests for advice are just pretense for an opportunity to brag about her daughter. She wants to know where your next child intends to apply so she can try to one-up you, but if her daughter is a mediocre student at best, that’s not going to happen. </p>

<p>as an aside - the IRS regulation regarding “considered unmarried” is for when a married couple has lived apart for the final 6 months of the year. Otherwise, they need to be divorced, or have a legal separation as recognized by their state of residence.</p>

<p>In order for her ruse to work, her husband would need to file his taxes separately from her, and from a different address. Even if he does that, they have to submit copies of their W-2’s which will show the same address (unless he changes it with the employer). Because they have the same employer, it will raise red flags if she claims to have no idea where he is. </p>

<p>If it makes you feel better, tell her it won’t work, and why. Also tell her if her D is going to apply to selective schools (you don’t have to tell her their top choices are only moderately selective), she may have to submit financial aid paperwork before the end of the year, with estimates for 2013, and might have to submit the 2012 tax returns (not really likely, but she doesn’t know that). That might give her pause. If not, let her crash and burn. If you are worried about the rest of the family blaming you (though it sounds like maybe they’re a lost cause, anyway), maybe you can hold and college conversations in front of someone else as a witness.</p>