<p>I understand that FAFSA doesn't require any detail on the noncustodial parent, NCP,(while CSS profile generally does). A few questions on this:</p>
<ol>
<li><p>Coverdell accounts or 529's in the noncustodial parent's name with the student as the beneficiary are not reported on FAFSA, correct?</p></li>
<li><p>Any distributions from these noncustodial student beneficiary accounts to the student or to pay education bills for the student need to be included as untaxed income on FAFSA in the year received, correct?</p></li>
<li><p>Finally, what about general tuition assistance from the noncustodial parent (not passing through 529s or coverdells)? Does this noncustodial tuition assistance need to be claimed as untaxed income on the FAFSA form by the student in the year the benefit was received?</p></li>
<li><p>Any suggestions on how to keep this noncustodial assistance off of FAFSA if it's already in these accts? Could the noncustodial parent gift it to the custodial parent to put into parent 529 briefly? or gift it to the student into a custodial 529 briefly?</p></li>
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<p>thanks</p>
<ol>
<li><p>Correct; only assets owned by the custodial parent or the student are reported on FAFSA.</p></li>
<li><p>Correct; this is student non-tax income reported the year it’s distributed.</p></li>
<li><p>Yes; the source of the funds is irrelevant, it’s still non-tax income for the student.</p></li>
<li><p>Not really; people here often suggest saving the contribution until the student’s last year of college, or having the student take out loans with the intention of paying them off immediately with a gift after the last FAFSA is filed, etc. What do you mean by “gift briefly”? Are you thinking of timing the gift so that it’s not reported as an asset? Non-custodial college savings are never reported on FAFSA as assets. Payments to the parent or student to defray college expenses are still non-tax income, there’s no simple way around it. There may be convoluted ways around it, depending on your specific situation and your relationship with your ex, but it’s just easier all around to do the right thing.</p></li>
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<p>This goes for grandparent-owned Coverdells and 529s as well, by the way.</p>
<p>thanks. We want to play by the rules, but don’t want to leave anything on the table either. Regardless, It makes sense that you can’t really get $ to the student without them showing up in either assets or income somewhere on FAFSA. Here’s what I was wondering…if the noncustodial parent made a gift of say $12K to the student in an UTMA to be placed in a “custodial 529” with the custodial parent as the custodian in the twelve months prior to filing the FAFSA form or all in the same year while the student is attending, how would it look on FAFSA? perhaps this is what you meant you meant by convoluted…</p>
<p>i’m guessing the gift would still show up as nontaxed income for the student…</p>
<p>Run the numbers carefully. It may make sense to put the 529 money into the name if the custodial parent - assuming of course that the parents get along well enough to do so.</p>
<p>Funds in a custodial 529 (an account owned by the student with an adult as custodian) would be reported on FAFSA along with all other college savings funds owned by the student or custodial parent. $12,000 in a 529 would increase the student’s marginal EFC by $672 per year. Note that in this example it doesn’t matter if the 529 is owned by the student or the custodial parent, both are assessed at 5.6%. You’re under the $13,000 Federal gift tax exemption, so no gift taxes would be owed. This would be preferable to $12,000 in non-tax income to the student, which would increase the student’s marginal EFC by $3000 (there’s a $6000 student income protection allowance, so only the 2nd $6000 would be included, and is assessed at 50%).</p>
<p>I have an S in college, he’s a freshman. Both of *my *parents have helped me with his tuition, $1500 each, paid directly to me which I in turn pass on to the college as part of my own contribution.</p>
<p>Since we seem to have some really knowledgeable people in this thread I’m hoping I can piggyback to ask what I need to do with/about those contributions, if anything?</p>
<p>In theory, the $3000 per year should be declared as student non-taxed income on FAFSA.</p>