At ICAN we see a lot of tax returns when we help a
student with a FAFSA. As an ICAN
advisor, we are not tax experts, but we do become familiar with tax information
in relation to students as dependents in connection with parents’ tax
returns. There are two myths I would
like to address.
First, many parents believe that if they claim
their children as a dependent on their parent tax return, the child cannot file
a tax return for themselves. This is not
true. Even is a student is claimed as a
dependent on their parents’ tax return, the student can still file their own
tax return. If a student works a
part-time job and has $400 in federal withholding withheld from their paychecks
in a year and they have no tax liability, the student can file a tax return
(probably a 1040EZ) and receive the $400 back if they had no liability. The student cannot claim a personal exemption
for themselves (the student) and the parent also claim the student as a
dependent. But yes, the student can file
a tax return, and should file, to recover the withholding from their
paychecks. That is the student’s money
that is withheld, and they should file a tax return to get it back.
Second, many parents believe that on the FAFSA the
student is a dependent or independent student based on whether the student is
claimed or not claimed as a dependent on the parent tax return. This is not true. A dependent student on the
FAFSA requires that parent information is reported on the FAFSA, and an
independent student means the student does not report parent information on the
FAFSA. Parent information would include
income and assets of the parent(s). Whether the student is a dependent or independent
student on the FAFSA is based on the dependency questions on the FAFSA not on a
tax return.
I hope this clears up some misunderstanding that
has been going on. Happy income tax and
FAFSA filing!
Steve - ICAN Council Bluffs Center
