If a non custodial parent gives a cash gift to his son, it should be reported on fafsa. This results in a reduction in financial aid (after allowances).
If a custodial parent gives money to her son, it does not need to be reported on fafsa.
Could a non custodial parent instead of giving money to his son, give it instead to his ex-wife?
And then. His ex-wife In turn gives money to her son.
Would this be ok? Would the money given from non custodial parent to custodial parent have to be reported on fafsa? If so where?
Let’s assume this is less than 14k, so it does not trigger gift tax.
Of course this results in a little loss of control for the non custodial parent. Since ex wife could decide to do whatever she wants with the money.
Also the same question applies if it is a gift from grand parent (or anyone else) to the custodial parent.
In our case, the non-custodial parent suggested putting money into the 529 (in the custodial parent’s name). There are certain scenarios under which the custodial parent could have used the money for something other than education, but non-custodial parent was trusting enough to do this. Custodial parent made sure the money was taken out and used the same year the money was deposited, and it didn’t show up as an asset, income, or gift of any kind. We even asked the school if this was okay (just weren’t sure), and they were fine with it and did NOT dock the kid’s FA.
Did this have to be limited to 14k?
Do you think if if it went directly to custodial parent, without 529 plan, it would make any difference?
There is nowhere on the fafsa that this needs to be reported?
I think it would be reported as support for the student/child if given to the ex-wife and used/passed on to the child.
No, but any amount above $14k will be counted against the gift giver’s federal estate tax exemption, which for 2015 is $5.43 million.
@twoinanddone
That is exactly what I am trying to avoid.
In that case I might as well give the money directly.
I think if I really give it to the ex-wife, and then she as an independent event pays something to the student, then nothing is illegal about it. Both events are not reportable on the fafsa. Just one of those loopholes.
Would really like an opinion of a professional in the area of financial aid.
Also, I believe this is reportable on css profile, just not on fafsa.
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Also the same question applies if it is a gift from grand parent (or anyone else) to the custodial parent.
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How much money are you talking about? $14k?
If you were to give the Grands the money, and they were to gift the mom, I don’t know it would need to get reported.
Less than 14k.
Not sure how noncustodial -> grand => custodial-> student
Is better than noncustodial => custodial -> student
Since either => above does not need to be reported on fafsa.
Actually none of the arrows above need to be reported on fafsa.
Yes they do. It asks for any amounts of gifts or income (unearned) not reported elsewhere (income, child support, assets would be reported in other places on the FAFSA). If your ex isn’t going to report it as child support, then it should be reported as a gift, or a payment made on her behalf. If you give the money to a grandparent and the grandparent gives the money to the mother, it is supposed to be reported. All gifts are supposed to be reported. Are they? Of course not, but most gifts aren’t in the thousands of dollar range either.
FAFSA doesn’t require the financial information of the non-custodial parent, but does require that amounts NCP pays on behalf of the child as child support or otherwise. This would be otherwise.
What is it that you want the child to do with money? If it is for college, report it. If not, wait until he’s out of college to make the gift.
If custodial parent receives a gift from a random person, which she does not use for student, where specifically should this be reported on fafsa?
Keep in mind that the only thing the FAFSA does is qualify you for federal aid; Pell, SEOG, FWS, subsidizded direct loans. It seems that unless your ex has a really really low income, your child will not be eligible for any of these things anyway. Most FAFSA only schools, will not meet 100% demonstrated need. The schools that are most generous with giving institutional aid will either ask for the profile along with the Non custodial profile or their own financial aid forms fro both the custodial and non custodial parents.
Instead of trying to do all of these financial gymnastics, simply use the $$ to help pay your half for your child to attend the UC system…
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Not sure how noncustodial -> grand => custodial-> student
Is better than noncustodial => custodial -> student
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Well, the difference is that the latter would be considered “spousal support” or “child support” which would get reported.
the former would be considered a gift from grandparent to parent, and that wouldn’t need to reported on FAFSA.
This thread is another reason colleges should have a set price for tuition and just stick to it.
Yes, when a non custodial parent pays anything to a student or towards a student’s support it is reportable on FAFSA and PROFILE. How this would work when a parent owned 529 is the source of the tuition payment, I do not know. The problem with a student owned 529 is that some PROFILE schools consider those student assets. Whether a 529 owned by a parent, either the custodial or NCP, used to pay the tuition with contributions made to it is a loophole is something worth examining.
It’s ridiculous that all of these nuances are present so that those savvy enough to learn them can get a pass whereas someone just going straight up into the situation can lose financial aid. IMO, the simplest way to take care of the matter is to draw up loan terms, papers and lend the money to the kid, making sure that interest is paid on schedule and the terms of the loan are strictly according to law. That way, it’s a loan. I know families that do this arrangement that do not even have financial aid in the picture. They’ll lend their kids the money and maybe forgive the loan depending upon the terms.
Spousal support and child support are long gone.
This would be a voluntary gift to ex wife. Let’s say for rent to atone for my past mistakes.
Then money would free up for her to pay something to son.
I do pay students room board and books from my 529 plan, and report on fafsa. Reducing their fin aid.
Student does get fin aid due to ex wife low income. Every situation is unique.
If I pay for summer abroad then fin aid would go down to zero. And then ex wife says not only I have to pay for summer abroad, also have to pay for loss of fin aid. Maybe best to not pay for summer abroad.
If you gift her money or pay her rent she is supposed to report it on FAFSA. If her parents do it, she is supposed to report it. If she wins it in the lottery she is supposed to report it. It is up to her if she does.
If a single parent makes $30k per year, the efc is calculated based on that. If the single parent makes $30k plus gets $20k in child support, or wins $20k or is given $20k, there is a different ability to pay than if that parent only had the earnings. I guess I don’t see what is unfair about it. It really isn’t different than if the parent decides to earn an extra $20k by getting second job or working overtime. That parent now has more money to pay and less need.
I don’t disagree with the concept, but the OP asked where a gift to a parent or money paid for a parent’s expense is supposed to be reported on FAFSA. I looked and couldn’t see where. If the student was the recipient, this would be reported in question 45.j. Where would this be reported on FAFSA if the parent was the recipient?
Thank you middkid86
Twoinanddone, i understand that what i would be doing would be gaming the system, but if it is legal, then i can do it, as so many others do with so many things. But i would not break the law. Just trying to inform myself.