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Professional Judgment
 
Providing More Than Half Support

Several aspects of need analysis, such as independent student status and household size, depend on a determination as to whether the student (or the student's parents) provide more than half support for the student, the student's child, or a dependent other than a spouse. The US Department of Education does not necessarily use the same definition of support as the IRS, so whether the individual is claimed as a dependent on an income tax return does not necessarily settle matters of support, although it is often a good guide. See FinAid's discussion of the IRS dependency tests for additional details, such as the impact of multiple support agreements in cases involving divorce.

FinAid's support test form is a useful guide to determining matters of support. This form considers both cash support and in-kind support. Although both types of support are useful for determining whether someone provides more than half the support for another individual, only cash support gets reported on Worksheet B of the FAFSA. Cash support from a dependent student's parents does not get reported on the student side of Worksheet B, only cash support from other persons. (Cash support from an independent student's parents does get reported on Worksheet B. Whether in-kind support from an independent student's parents gets reported is a professional judgment item.) Neither cash support nor in-kind support received by the student's parents get reported on the FAFSA.

Note that foster parents do not count as parents for financial aid purposes, and so foster children do not count as legal dependents even if they live with and receive more than half their support from the student or the student's parents. (In most cases the foster parent does not provide more than half support, as the state provides the support. Foster care payments are not reported on the FAFSA.) As a result, foster children do not make the student independent, nor are they counted in household size.

With regard to legal guardians, there is an assymetric relationship. A legal guardian does not count as a parent for federal student aid purposes, per the discussion under Who counts as a parent? on page AVG-26 of the 2007-08 verification guide:

A foster parent or a legal guardian is not treated as a parent for FSA purposes. If the student.s parents are dead, he is independent. Otherwise, a dependent student must report information about his parents even if he has a legal guardian, unless the school has a documented reason to perform a dependency override.

If a student is living with her grandparents or other relatives, the same principle applies. Unless the relatives have adopted the student, their income should not be reported on the FAFSA as parental income. Any cash support from persons other than the student.s parents should be reported as untaxed income, as discussed in Step 2. The school may also consider other kinds of support as part of the student.s financial resources and use professional judgment to include the support under the item for student.s untaxed income (see Chapter 5 on professional judgment).

Any support the student receives from his or her legal guardians gets reported on Worksheet B, but the student does not list them as parents on the FAFSA.

However, if the student is the legal guardian for someone else who lives with the student and receives more than half his or her support from the student, the student is considered to have a legal dependent other than a spouse. This is sufficient for the student to be independent and to count the dependent in household size. (This does not, however, apply to foster children.) See, for example, the margin example on page AVG-23 of the 2007-08 verification guide:

Laurel is going to college and is her cousin Paul.s legal guardian. Paul receives Social Security benefits, but because he.s a minor, the benefits are paid to Laurel on his behalf. These benefits provide more than half of Paul.s support and count as income to Laurel. Because Paul lives with Laurel and will be supported by her (through the Social Security benefits) throughout the award year, Laurel answers "Yes" to the legal dependent question. If Paul didn.t live with Laurel, she would have to answer "No" to the question.
Thus the importance of legal guardianship is assymetric. If Alice is Bob's legal guardian, Bob lives with Alice and Alice provides more than half of Bob's support, then Alice can count Bob in household size on her FAFSA and Alice is considered independent by virtue of having a legal dependent other than a spouse. However, Bob cannot list Alice as a parent on his FAFSA or in his household size, although he must list the support he receives from Alice on Worksheet B.

The 50% support test is not necessarily the same as being claimed as an exemption on an income tax return. The notions of support used by the IRS and the US Department of Education are not perfectly aligned. (For example, the IRS does not allow recipients of government assistance programs such as Temporary Assistance to Needy Families (TANF) to count that assistance as part of their support for the children, while the US Department of Education does.) Moreover, claiming an exemption is a voluntary act, so failure to claim an exemption does not mean that the 50% support test isn't true. There are also situations where an individual might not support another and yet still be able to claim the exemption (e.g., divorce cases where the parents trade off the exemptions on even and odd years, multiple support agreements). Generally speaking, claiming an exemption is an affirmative statement of support, but nothing should be read into a failure to claim an exemption.

See also Income Insufficient to Support Family. Even if the student is earning insufficient income to support his or her children, the student could still be providing more than half their support.

 

 
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