Does financial aid affect how I file taxes?

Question

I want to apply for financial aid for college but I have concerns. I'm worried because even though I'm married, I file single to get my earned income tax credit. I use a different address and my husband files single also( he makes too much money for us to get earned income credit). Also should I use my current address( we own this house together)?
I have been told by friends to apply for financial aid as single also. Does anyone know if that's a good idea or not? How does financial aid work anyway? do they check everything with a magnifying glass? I just want to go to college.

Answer 1

Financial Aid usually doesn't affect how you file taxes, but the reverse is always true: your taxes definitely DO affect your financial aid.

Generally, the IRS doesn't care if you received Financial Aid. The only time you really need to "report" your awards is if your grant/scholarship aid exceeds the cost of your tuition/fees/books/supplies. Any "excess" should usually be reported as income. You can check with a tax advisor on the specifics -- this usually isn't an issue for most students. There are tax *benefits* to being in school, too. You can deduct some of your tuition expenses and potentially get a Hope Credit or Lifetime Learning Credit. Later, when you enter repayment on your student loans (if you borrow loans), you can deduct any interest that you paid on them for that year.

Now, as far as how your taxes affect your financial aid...

It is important to know that even if you file singly on your taxes, you are nonetheless married. You must disclose this when you apply for Financial Aid; it's not optional. If you misrepresent yourself, you could be subject to penaties.

Are your friends Financial Aid "experts?" I have my doubts. It is not necessarily better to file singly. How old are you? If you are younger than 24 you are considered "dependent" and will need to provide your parent's information on the FAFSA; the FAFSA's definition of "dependency" is fairly clear-cut. Sure, there are ways to appeal to your financial aid office that you are, in fact, "independent" -- but these will all probably involve revealing that you are married. How long do you think you can hide the fact that you are married from your school's entire staff? People talk. Moreover, your Financial Aid Office has seen a lot more applications and taxes than you probably have, so they know what to look for and if an applicant is hiding assets. They can also request copies of your bank records.

Always err on the side of caution when applying for Financial AId. Schools don't always go over everything with a magnifying glass, but they definitely *can.* Schools are required to perform a process called "Verification," wherein they cross-check the information on your FAFSA with the information on your taxes and other household data. If any of the numbers are "off," they will adjust them (which can work in your favor or not). Financial Aid Administrators are reqired by law to resolve any conflicting information in your file; if they have suspicions, they can ask for whatever documentation it takes to resolve the matter.

Answer 2

It asks for your spouse's income on the FAFSA form. I am pretty sure that if you are married, you will need to include his income in your FAFSA.

As far as taxes go, much of the same information needed to fill out the FAFSA is needed for your taxes. While you don't necessarily need to file your taxes early, you want to submit your FAFSA as soon after January 1st as possible. This is because many financial aid programs work on a first-come, first-serve basis... meaning the earlier you file your FAFSA and other financial aid forms the better.

A couple great sites to learn about financial aid are:

http://www.finaid.org
http://www.CollegeToolkit.com

Good luck!

Answer 3

I know this was 8 years ago but im worried bout my taxes effecting my fafsa my husband makes good money but I only work pt. and right now we cant afford to pay for my schooling I just need to know if I would continue to get financial aide while in school if we file jointly or should I file separately

Answer 4

Financial aid should not effect your taxes, as it's not considered income. If you are looking at grants, then it's only a grant, money given to you for 1 purpose. If it's a loan, then eventually when you start paying on them, it will actually help your taxes, as it's payment you are making. You'll recieve a payment notice at the end of the year showing how much you paid, which you report on your taxes, and it counts in your favor.

Answer 5

Yes, financial aid affects your taxes. I recieve a state scholarship and each year the school sends me a form to file along with my taxes.

If you have questions you should be able to ask a tax preparer about federal and state tax codes and regulations. But, as far as I know, you need to report the money if it is a significant amount, as in $500- 1000 and above.

Answer 6

If you are married you are REQUIRED to submit your spouse's financial data on the FAFSA (the federal aid application). If you fail to provide the information you are expected to provide and are selected by your school or by the Department of Education for verification (kinda like an IRS audit) you could jeopardize your future eligibility for financial aid. So make sure you complete the form honestly.

Answer 7

Unless there is significant tax credit, it is ALWAYS best to file joint.