For reasons that needn’t concern us here, I didn’t file a tax return for 2019. I don’t plan to for 2020. I don’t know what the future holds but let’s assume the worst.
I am legally separated. On the FAFSA, I plan to claim that I am the custodial parent. I’m wondering whether my tax situation will be a problem. And even as I type this, I’m thinking that it will. Colleges want to know how much I’m making, right? They’re going to want to see my returns to verify my income, right? No return, no aid, I’m guessing.
Could a knowledgable person please give me some basic information about financial aid and taxes. Who will want to see what and when? If you can speak to my particular—and lousy—situation, that would be great.
Please don’t feel bad about helping a criminal. I know that I’ve done wrong and I feel awful about it. A lot of things had to go wrong to put me in this position.
I would recommend that you see an accountant, and file your taxes for 2019 and soon for 2020. This would take a huge load off your mind, and will be necessary if you want to file FAFSA to apply for financial aid.
I had a friend once who was several years behind in filing taxes. They eventually caught up. I do not know if they paid a fine, but they definitely did not go to jail.
The sooner you get this straightened out the happier you will be.
If you are legally not required to file, you can state that and be in compliance and considered for financial aid. If legally required to file, but you haven’t yet, you will need to fill out the tax forms and then use those numbers in the Fasfa and CSS profiles. You won’t be able to do the IRS retrieval until you actually send your taxes in but that shouldn’t stop you from being considered for aid. The non-custodial parent will usually need to file as well.
If you file your taxes late, you will likely need to pay a fine and potentially interest on any tax due. It is unlikely there would be legal consequences unless you continue to avoid filing.
Are you required to file a tax return and are choosing not to?
Are you really the custodial parent?
If you haven’t filed a tax return, you will need to complete a non-filers statement. You will have to indicate why you didn’t file a return. If the reason is “I didn’t feel like it” that won’t fly. There are legit reasons for not filing a return…never worked that year, income below a certain threshold, things like that.
But if you were supposed to file a return and didn’t, you are correct…you will need to correct your tax filing situation or your student won’t receive a nickel of need based aid.
@HMom16 you wrote “ The non-custodial parent will usually need to file as well.“
The non-custodial parent is never mentioned on the FAFSA so really the tax filing status if that non-custodial parent for FAFSA financial aid purposes is a non issue.
If this student applies to a college requiring the CSS Profile and the non-custodial parent form, then both parents need to complete tax returns if required to file.
To @paul6001 one thing to remember…in two years, the FAFSA is changing. For divorced parents, the parent who provides the most support will be required to file the FAFSA, not the parent of residence.
@thumper1 Are you saying in 2 years, in a divorced family, the parent providing the most financial support for the applicant will be the one filing for the FAFSA, and not the one that the applicant lived more with? Did I understand your statement correctly?
Thank you for the link - I’ll read through it in detail. In the meantime, I’m wondering if anyone here may know the answer for the following off the top of their head:
What if my DC lives with me and I pay all living expenses, but about ~60-70% of my “income” is child support from my ex? Would that make me the parent to file FAFSA (since I pay for all expenses from my bank account, so to speak), or my ex (since the money originates from him, via child support)?
Until the COVID 19 relief bill changes take effect in 2 years, the custodial parent (the parent the child lives with the most) files FAFSA. Child support you receive from your ex is reported on the FAFSA you fill out. Anything to add @thumper1?
Yes, if you make enough income where you’re required to file a tax return, legally this is a problem and it is a criminal offense. The IRS can come after you and the longer you wait to file a return, the more criminal exposure you have. You should contact a tax lawyer and accountant and have your returns filed for 2019 asap. You’re not quite that late yet and will only pay a nominal penalty. Ultimately if you don’t file, they can place a lien on your property.
As for FAFSA, if you’re the one trying to fill it out, your tax return is also required and if your kid attends a school requiring the CSS then that’s a whole other issue and tax returns are required there as well as they need to be uploaded for both the FAFSA and CSS. They can be manually updated or the IRS tool can be used to connect and download them.
Also, the fact that you’re legally separated, if your spouse ever decides to try to get more money, or actually file for divorce, his/her lawyer will want your tax returns and if you can’t produce them at that time, you’ll be in bigger doodoo than you are now. Again, file them asap and pay whatever penalty you have to pay. While you’re still legally married there may be issues related to that as well and your spouse might be on the hook as well.
You’re only behind one year? That’s honestly not a big deal. My dad was behind years when they caught up with him. That was a big (expensive) deal. I’m with everyone else and suggest you just get them filed. There’s no real reason not to. At this point no one is going to “shame” you for it. You’ll just have to pay a fine and interest.
I’m wondering if the issue is that the income was obtained illegally. You can’t put drug dealer down for your occupation though I guess you could just say self-employed.
Agreed that there’s an issue with either the source of income or something complicated by the separation. OP just needs to know that providing taxes is only the beginning and that other fibs regarding saving, investments, businesses, etc. only makes things worse. The FAFSA just calculates an expected family contribution - it’s the college financial aid offices that will be reviewing the submitted docs, grinding the details, and asking for more info. Every. Single. Year. Keeping the student’s well-being in mind, if the parent isn’t going to claim them as a dependent then the student should at least work towards changing their dependency so they can claim more aid on their own in the coming years. Or else they do community college, have a gap year, etc. - but that’s only helpful if there is an eventual plan is to file something for 2019 and 2020. My $.02 is not to entangle the student’s college in whatever issues there are any more. It’s going to be a high-wire act for years that could all fall apart at a moment’s notice and cause the student even more harm later. If the other parent has better financial information, maybe they are the ones who should be filing and perhaps OP can simply pay an accountant or similar to work through the FAFSA process for the other parent.
OP- please be aware that “changing their dependency” is not a simple matter of a kid declaring “I’m no longer a dependent.”
“By law, to be considered independent on the FAFSA without meeting the age requirement, an associate or bachelor’s student must be at least one of the following: married; a U.S. veteran; in active duty military service other than training purposes; an emancipated minor; a recently homeless youth or self-supporting and at risk for homelessness; a parent who provides more than half of the financial support for a child who lives with him or her; or someone who has been in foster care, been an orphan or a dependent or ward of the court for any period of time after the age of 13.”
I’m not sure OP wants his/her kid to be homeless (or at risk of homelessness) in order to get more aid. Or any of the other situations…
OP needs to clarify whether they are the custodial parent and whether there is a need for Financial Aid.
If OP is the non-custodial parent and does not get current on tax filings, the student will be limited to applying to FAFSA only schools, and/or Profile schools that don’t require non-custodial parent financials.
If OP is the custodial parent and does not get current on tax filings, the student will not be able to apply for FA.
The OP will be able to file for financial aid, but most certainly will either need a tax transcript or ability to link to the IRS Data Retrieval Tool if he or she files.
If they OP plans to put an income that would either be $0 or make this student PEll eligible, there is no doubt the students financial aid application will be flagged for verification…and that’s even IF he files his taxes or gets a tax transcript noting a legit reason for not filing.
Colleges do their due diligence, and frown extensively on dishonesty.
The OP should also know that on the long shot chance federally funded need based aid is disbursed to this student, the college CAN request repayment of this if a discrepancy is found during the academic year, and yes they do this.
Also, getting need based aid using knowingly inaccurate information is considered fraud. The OP needs to look that up…it’s a crime.