New insurance for over 25s as taxable benefit affecting FAFSA

Paying for College
1

<p>One more complexity to add to life! Due to the new law, my S, newly turned 25, will be able to return to the family health plan provided by my employer. But the powers that be have decided that unless he is my dependant, this will be a benefit that is subject to tax. </p>

<p>As he has been teaching English in China for the past two years, he has not been subject to American taxes. Currently he is in Americorps, so his income is also low, and from what he has been told, his payment is not 'income' but a living stipend. However they do take taxes out of his checks, which confuses us both. If this really is a stipend, then he can easily be my dependent, if not then we may or may not be able to squeek by under the $3600 or so that mandates him filing his own taxes. </p>

<p>He has two sisters in college, and I am concerned that if he is not my dependent, my bottom line for FAFSA purposes will be larger, and then we'll be less eligible for financial aid. My question-is there any provision for this situation on the new FAFSA form that looks at '09 taxes?</p>

2

<p>While schools can & do allow children over 25 to be included in the household size, others do not. The school where I work is one that does not. The best thing to do is contact the school’s financial aid office to ask about their policy. You can put him in the household size, but if you are verified & the school takes him out, you might have an unwelcome surprise at a late date.</p>

3

<p>Well, that is an interesting idea. Thanks, Kelsmom! I did talk to a financial person today, and I cannot take him as a dependent. Though he owes no US tax, his income was too high for him to be a dependent. But if I’m providing insurance as well as a permanent home, well, we’ll see what the FA offices think of this strategy. My girls go to FAFSA only schools however, and will have to see how the household size question is worded on the form.</p>