Student tax help.?

Question

Okay. Heres my situation. I'm currently 21, a student, and plan on filing taxes for the first time. I live away from home in an apartment. I worked alot last summer and did work study during the fall. My aunt told me I should file to get some money back and I should tell my mom not to claim me because I've supported myself for over two years.

Heres my question: My main concern is getting the most financial aid I can get. I have 1 more year left and 3 of my scholarships are done after this year. I really need all the grant money I can get. Whats the best strategy for this? Should I file as an independent or let my mom claim me? Should I even bother filing? I made a decent amount over the summer but work study pays min. wage.

Thank you everyone for your help.

My mom made over 45,000 I believe. Does that make a difference? I probably made less than 5.

Answer 1

You can file your taxes as independent if you prefer, but remember that the IRS is a completely different agency from the Board of Education, i.e. you will still be considered dependent when you file your FAFSA.

Assuming that your mom is flat broke, you will only get the full Pell Grant if you made less than [approx.] $13-14K in 2006. Even if you have supported yourself for over 2 yrs., the Board of Education doesn't really care, as long as you are under 24 yrs old; they figure that if you are unmarried, then your parents are probably still supporting you, so you don't need their grant money. Simply because of your age, if your mom made too much money last yr, then you can't count on not getting any grant award at all. If you can't afford to pay out of your own pocket, your only option to finance your education will be loans.

Yes, you should file a tax return, though, as long as you earned any taxable income at all. Work study is considered financial aid (not income), so you won't have to report it on your 1040. I haven't had to file a tax return in 3 yrs, because all my income has come from finaid.

I have 3+ yrs of finaid experience, so i hope this helps...

Answer 2

You don't have a choice to "let " your mom claim you if you are not a dependent. If you paid over half the cost of your own support, then you are not a dependent and you should file your return claiming yourself.

If you are a dependent, then your mother may choose to claim you or not. If you are paying the costs of your education partially through your own money or loans, then you may be able to take some education credits as long as your mother doesn't claim you even though you are a dependent.

A knowledgable tax preparer will figure out how much you might get from education credits versus how much your mother would get from your exemption.

I can't predict the effect of your filing status or income on your financial aid package. Ask your financial aid officer at your college.

Answer 3

It is always a good idea to file. In fact it is a legal requirement.

The best way to answer questions like this is to calculate your taxes both ways, and see what difference it makes.

Depending on the amount of your income, claiming yourself *might* not save you much money, while it might save your mom a lot of money. But you won't know exactly unless you calculate it both ways.