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I am wondering whether to file married or separately. If i…

I am wondering whether...

I am wondering whether to file married or separately. If i file married, there is no financial aid through FAFSA for my two college-age daughters. Can you tell me how much aid I might be eligible for if I filed separately. Last year, I earned about 25K, but I have mutual funds of about 320K and my house is worth about 400k (no mortgage). Thank you.

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My husband and I live separately, but we are still legally married. Last year he earned about 180k

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3/15/2018
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7,469
Experience: Extensive Experience with Tax, Financial & Estate Issues
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Hello, my name is***** goal is to give you a complete & accurate answer. I am working on your request now & I will respond as soon as possible.

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Whether you file Jointly or Married Filing Separately, your daughters are going to be required to have their father submit his financial information also. Awards based upon need are made to the students, not to the Parent(s).

Given the numbers you quoted if you were to file Married Filing Separately, that would force your husband to file the same way, resulting in substantially more income taxes to be paid in total compared to filing a Joint Return.

Steve G.

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Customer reply replied 5 months ago
Are you sure, Stephen? I was told (by several sources) that only the parent that the children live with is considered when it comes to FAFSA.
Customer reply replied 5 months ago
I live in New Jersey. Does that make a difference?

I don't believe that is correct as I've represented several women that were divorced, where the children were domicled with their mother and their father was required to furnish his tax returns prior to any award of financial aid. In your case, you are actually still married.

The idea being that when parents divorce, they don't divorce their children, nor can they relinquish their moral (not legal) responsibilities to their children.

I have never encountered a case where the student's father was not required to furnish his financial information if the Student was applying for financial aid (either grants, loans or work study).

You can always try by filling on the FAFSA (I believe it must be completed online now) on your figures alone, and provide your tax return after filing. The normal procedure when this is the case, is that the student is contacted about obtaining their father's financial information. They put the onus on the students.

Steve G.

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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,888
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi. My name’s Lane. I am a different expert

...

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.

Bear with me just a moment.

I'm reviewing your question now and typing up my reply.

...

I'll post that in just a few moments. Then, let me know if you have further questions on this.

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An informal separation is treated the same as a legal separation or divorce on the FAFSA. Even though the couple is still married, the income and assets of the "ex-spouse" are not reported on the FAFSA.

...

The "ex-spouse" must have

  • left the household and,
  • be maintaining a separate residence.
  • Living in different rooms or floors in the same house does not count as an informal separation.
  • Likewise, maintaining a separate household in a different state for employment purposes does not count as an informal separation.
  • The separation must be for an indefinite period, not a temporary absence from the home.

...

This gets into an area where many financial aid offices (when they get the SAR) will ask for proof of this separate dwellings, and many times a sworn statement that this is a permanent situation.

...

But what you're hearing is correct. Just remember, College financial aid administrators may ask for proof of the separation, such as copies of utility bills for separate residences. And some will ask for a witnesses affidavit.

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Here's a good overview of the subject: http://www.finaid.org/fafsa/headofhousehold.phtml

...

From there:

...

"The definitions used by the US Department of Education and the IRS are not perfectly aligned, so it is possible that an apparent discrepancy will be resolved with no changes. For example, the IRS generally considers an informal separation (as opposed to a legal separation or divorce) to still be married and eligible for filing under either married filing jointly or married filing separate statuses. On the FAFSA, informal separation, legal separation and divorce all qualify for separated status..."

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Customer reply replied 5 months ago
Thank you, ***** ***** is what I had thought was the correct answer.

Yes, here is it from the FAFSA instructions:

...

https://fafsa.ed.gov/fotw1718/help/fotw17a.htm

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If this has helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars on your screen, and then clicking “submit")

That’s the only way JustAnswer.com will credit me for the work.

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Thanks,

Lane

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
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