The college application process is an exciting yet complex journey, and one important step is completing the Free Application for Federal Student Aid (FAFSA). In this blog post, we'll provide clear and straightforward answers to your most pressing questions about the FAFSA. We'll break down topics like "Divorced Parents," "Child Support," "Family Size," and "Manual Tax Information" in a way that's easy to understand. By the end, you'll have the knowledge you need to tackle the FAFSA with confidence.
Divorced Parents
Let's begin with a common question: How do you handle divorced or separated parents on the FAFSA? Here are the key points:
For divorced parents, who is the parent of record on the FAFSA form in cases of divorce or separation?
The parent of record is the parent whose financial information is used on the FAFSA. Prior to 2024-25, it was typically the parent the student lived with most. However, starting in 2024-25, it's the parent who provided the most financial support during the past 12 months. And, if the parent of record is remarried, then the stepparent's income and asset information must also be included on the FAFSA.
What if both parents provided equal financial support in the last 12 months?
If both parents gave the same financial support in the last 12 months, the parent with the greater income or assets should complete the FAFSA.
Who is the parent listed on the FAFSA form when a divorce decree says that parents rotate who claims the student on the tax return?
What matters isn't what the divorce papers say, but who supported the student the most financially in the last 12 months.
For further reference, Federal Student Aid (FSA) has created this helpful infographic: Is My Parent a Contributor When I Fill Out My FAFSA® Form?
Child Support
Now, let's talk about changes in how child support is handled:
How does the FAFSA form treat child support in 2024-25 and beyond?
Starting in 2024-25, child support received won't be considered income for the parent receiving it. Instead, it becomes an asset in the financial aid calculation. Additionally, child support paid will no longer be an allowance against the income of the parent paying the child support.
So, what year should parents use to report child support received?
You should report child support received for the last complete calendar year as of the date you file the FAFSA.
Example
Jasmine is a dependent student, and her mom receives child support for her from her dad. Jasmine's mom is filling out the 2024-25 FAFSA on October 15, 2024. The question here is, which calendar year should Jasmine's mom use when reporting the child support received?
a) 2024, but only for January through October, since the year isn't over yet
b) 2023, for the entire year
c) 2022, because the FAFSA is for the 2024-25 award year, and it asks for 2022 income and tax information
The correct answer is b) calendar year 2023. Parents report child support received for the last complete calendar year as of the date they file the FAFSA. Additionally, if there are multiple children in the family, the parent would report all child support received for them, not just the amount received for Jasmine.
Which parent gets to claim child support as financial support for the student?
When making the determination of who should be the parent of record on the FAFSA form, child support belongs to the person paying it, not the person receiving it.
Example
Let's consider Kim's situation. Kim lives with her mom and her mom's partner. Her mom earns $40,000 a year from her job, and her mom's partner earns $85,000 a year. Kim's dad pays $70,000 a year in child support to her mom. Kim's dad has not remarried and does not provide any other financial support for her.
Now, here's the question: Whose information should be reported on the FAFSA form?
a) Kim's mom
b) Kim's mom and her partner
c) Kim's dad
The correct answer is c) Kim's dad. The $70,000 he pays in child support is considered financial support from him for Kim. Even if Kim's mom contributed all $40,000 as financial support for Kim, it would still be less than the $70,000 that Dad provides. Additionally, Kim's mom's partner's income and any financial support he may provide for Kim do not affect the FAFSA because he is not married to Kim's mom.
What happens when child support ends after the last completed calendar year for which it was reported?
If child support stops after the last completed calendar year for which it was reported, your school may choose to adjust your financial aid package with proper documentation.
Example
Alexander's mom completed the 2024-25 FAFSA in December 2023 and included the child support she received for the entire year of 2022. However, child support stopped coming in January 2023 after Alexander's birthday.
Now, here's the important question: Can Alexander's mom request an adjustment to the FAFSA because the child support stopped?
The answer is yes, she can. If she provides the necessary documentation, the school can make a case-by-case decision to reduce or completely remove the child support amount from Alexander's financial aid calculation for the 2024-25 academic year. This is because those funds won't be available to help pay for Alexander's education.
Family Size
Understanding family size on the FAFSA is important:
How is family size determined on the FAFSA form, and can it be adjusted?
The FAFSA calculates family size based on IRS data, including the taxpayer and dependents on the tax return. You can adjust it on the FAFSA if IRS data is no longer accurate.
Who should be included in family size?
For dependent students on the FAFSA form, here's what you need to know:
The student.
Their parents, even if the student doesn't live with them.
Exclude a parent who has passed away or isn't living at home due to separation or divorce.
Include a parent who is serving in the US Armed Forces and is apart from the family.
Also, include the parents' dependent children if they live with the parents or are away for college but still get more than half of their support from the parents and will continue to get that support from July 1st to June 30th.
If there are other people living with the parent, include them too, but only if they'll get more than half of their support from the parents during the same July 1st to June 30th time frame.
Manual Tax Information
Sometimes, you'll need to provide tax information manually:
Under what circumstances would someone filling out the FAFSA need to manually provide tax information?
Well, if you or your parents haven't established a verified StudentAid.gov account (FSA ID) before starting the FAFSA, you might have to manually input tax data until your FSA ID gets verified. But once your FSA ID is confirmed, FSA will transfer Federal Tax Information (FTI) directly from the IRS into your FAFSA form. Of course, this will happen as long as you've granted FSA consent and approval to do so. This automated process will overwrite any manual information you’ve entered. To avoid manual entry, contributors should create their FSA ID prior to filling out the FAFSA.
But what if your marital status and tax filing don't match due to a divorce?
In such cases, you may need to manually provide tax information to make sure your FAFSA accurately reflects the situation.
Example 1: Divorce
Meet Diego, a dependent student who’s completing the 2024-25 FAFSA form in January 2024. Diego's biological parents, Carlos and Sofia, filed their 2022 tax return together with a married filing jointly status. However, Carlos and Sofia divorced in May of 2023. Neither has remarried since.
Using the FAFSA's parent wizard, Diego figures out that Sofia should be the parent listed on the FAFSA form. But here's the twist: Sofia's current marital status doesn't match her tax filing status from 2022. Carlos isn't considered a parent on the FAFSA form and isn’t a required contributor, but his information can't be separated from Sofia's on the 2022 joint tax return. So, Sofia needs to manually enter her tax information.
Example 2: Remarriage
Now, let's introduce Lena, another dependent student who's filling out the 2024-25 FAFSA form in March 2024. Her parents, Maria and Roberto, jointly filed their 2022 tax return. But in June 2023, Maria and Roberto divorced. Maria remarried in November 2023 to her new spouse, Javier.
As Lena goes through the FAFSA parent wizard, she determines that her mom, Maria, should be listed as the parent of record on the form. Additionally, Javier, her new stepfather, is also a required contributor. Both Maria and Javier are asked to contribute to Lena's FAFSA.
Now, the question pops up: will manual tax information be needed? Maria will indeed need to provide manual tax information because she didn't file a joint tax return with her current spouse in 2022. But, for Javier, it depends on his tax status. If Javier filed a return in 2022 as single person, that information can be retrieved from the IRS. However, if he was previously married and filed a joint return with someone else in 2022, he'll also need to provide manual tax information.
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Navigating the FAFSA doesn't have to be confusing. Whether you're dealing with divorced parents, understanding child support changes, determining family size, or handling manual tax information, we’ve provided you with the guidance you need. Armed with this knowledge, you can complete the FAFSA with confidence and secure the financial aid you need for college.
Source: Federal Student Aid