I have a tax-related situation and if anyone can provide some information, I’d be infinitely grateful. The short version of the story: my parents claimed me as a dependent on their tax return even though I technically shouldn’t be (I now provide more than half my support and I’ve lived on my own for a few years now). I learned they claimed me today as I put on my own tax return that no one else can claim me and my returns were rejected. Fine, I might lose the $300 tax rebate/refund/whatever but this isn’t my main concern.
My concern now is that next year I’ll be in my first year of graduate school and I’ve been looking forward to being able to claim myself as independent on the FAFSA (because I’ll be in grad school) and finally get some financial aid. Up until now my parents’ income has greatly screwed up my ability in getting any financial aid. My question: will my parents claiming me as a dependent on their tax return negatively impact my ability to claim myself as a independent on the FAFSA and get federal aid? Or is the FAFSA definition of being independent what matters? Any guidance would be greatly appreciated.
It was many years ago, so things may have changed, but this did indeed screw me over one year for financial aid. In my case it was a relative other than my parents who claimed me, and it would have completely made it impossible for me to stay in school had they used that family’s income in my calculation. Since it was a private school, they were able to work with me and get me some more aid. If your financial aid is going to be worth more than the deduction was worth to your parents, it might be worth asking your parents to file an amended return. On the other hand, maybe they would be willing to pay you what it was worth to them to file with you as a dependent. My experience was that a certain amount of judgment went into deciding what was more than 50% of my support. The relative who claimed me felt his calculation would have been defensible to the IRS, but it wasn’t particularly straightforward.
To my understanding, the whole aid package has more to do with the particular school’s definition of independent, not the FAFSA’s. I was a legally emancipated minor (in Michigan, in 2001) and the actual bargaining took place directly with my public university. Having a certificate of legal emancipation was not sufficient evidence that I was an independent. I had to provide them six letters written by non-relatives that proved I wasn’t receiving aid from my family. The school then granted me permission to skip the parents’ section on the FAFSA. I don’t know if they had to call a special hotline and explain my situation to the government or what, but it definitely required extra legwork on the university’s part. I then had to write a statement every year asserting that my situation was unchanged in order to be considered an independent. The government had nothing to do with it. It was entirely at the whim of my undergraduate institution. The government gave me $10,000 in student loans and a Pell Grant… in other words, they barely gave a shit about my unique circumstances. My school, however, gave me $70,000 in grants and scholarships (and ya’ll wonder why I’m so obsessively enthusiastic about my alma mater.)
Grad school though is a different ball of wax. If you’re 25, a grad student, or married, you’re automatically considered an independent (I also note there is an ‘‘emancipated minor’’ option on the FAFSA at last… yay for progress!) Some school financial aid forms may require you to disclose the fact that you were claimed as a dependent but in most cases you can attach a letter of explanation for special circumstances. The bottom line is you have to communicate openly with your school about your financial situation. Even if you get screwed by the government, it doesn’t mean you have to be screwed by your university.
If you’re starting grad school, you’re starting anew. I learned as an undergrad at a private university that the aid I received depended on the original FAFSA. The Pell grants and Staffords progressed a on a schedule, but any uinversity grants were stable. They expected you to up the same cash every year and it was diffcult to have aid increased even if your financial situation had worsened. FAFSA will help you with federal and state grants and loans, but the rest depends on the university. When I applied for grad school (at 24), I declared myself as a dependent (no job, living at home). The private one expected me to up a lot (going from overly generous to stingy), but the public one accepted I couldn’t pay my way and provided a large state grant I wasn’t aware I was qualified to get. At the private university, if you were married, your spouse was expected to contribute. even if they were a student at the same university, as if they worked full-time. So, if you want to declare yourself as independent, have your parents’ file an amended return just in case, fix your situation with your return and use that for the FAFSA. You want to set yourself up to receive the maximum amount of aid for all of grad school by setting down the groundwork now and save yourself a lot of headaches later.