Does claiming my son as an exemption on my tax return make me the custodial parent on his FAFSA?

Question:

My husband and I are divorced and do not live together. We have joint custody of our son and split his expenses equally. According to our divorce decree, I claim our son on my taxes in even years and my ex-husband claims him in odd years. When I claim him as an exemption on my federal income tax return, does that make me the custodial parent on his FAFSA?

Answer:

The parent responsible for completing the FAFSA (Free Application for Federal Student Aid) is not necessarily the same as the parent who claims the student as an exemption on the parent’s federal income tax return. Which parent claims the student as an exemption on the parent’s federal income tax return does not affect which parent is responsible for completing the FAFSA.

Dependency status on the FAFSA and dependency status on federal income tax returns are not necessarily the same. Tax filing rules are specified by the Internal Revenue Code of 1986 and overseen by the Internal Revenue Service (IRS), while FAFSA filing requirements are specified by the Higher Education Act of 1965 and regulated by the U.S. Department of Education. The two statutes have different definitions of support. For example, the IRS allows multiple support agreements, where divorced or separated parents can reach an agreement to specify which parent gets to claim the student as a tax exemption, while the U.S. Department of Education does not. The FAFSA recognizes informal separations in addition to legal separations and divorce, while the IRS does not.

Note also that the parent responsible for completing the FAFSA, often called the custodial parent, is not necessarily the parent with legal custody.

The rules for determining which parent is responsible for completing the FAFSA when the parents are divorced or separated or never married appear at 26 USC 1087oo(f). If the parents live together, information from both parents must be reported on the FAFSA. (If one or both of these parents have married someone else, yet all of them are living together, the parent and stepparent who provided more financial support to the student are responsible for completing the FAFSA.) Otherwise:

  • The custodial parent is the parent with whom the student lived the most during the 12 months ending on the date the FAFSA is filed. Sometimes, the parents will have to count the number of nights to determine which parent is responsible for filing the FAFSA. Even if the parents share joint custody, usually the student will have lived more with one parent than the other, since there are an odd number of days in the year. The main exceptions occur during leap years, recent divorces and when the student has been absent from the home.
  • If the student lived equally with both parents, the custodial parent is the parent who provided more financial support to the student during the 12 months ending on the date the FAFSA is filed.
  • If neither parent provided more financial support, then the custodial parent is the parent who provided more financial support to the student during the most recent calendar year for which parental support was provided.

If none of these criteria apply, the college financial aid administrator will usually specify that the parent who has the greater income (including the income of a stepparent if the parent has remarried) is responsible for completing the FAFSA.

The U.S. Department of Education also provides guidance to college financial aid administrators through the Application and Verification Guide (AVG) and Dear Colleague Letters (e.g., GEN-13-12, GEN-13-25). The AVG largely mirrors the statute, but provides some additional insights, such as, “If the student’s parents are divorced, he should report the information of the parent with whom he lived longer during the 12 months prior to the date he completes the application, regardless of which parent claimed him as an exemption for tax purposes.”

Generally, the student will qualify for more financial aid if the parent with the lower income (including the stepparent’s income, if this parent has remarried) is the custodial parent. In some cases the family will be able to specify which parent is responsible for completing the FAFSA, depending on the degree of flexibility in the divorce decree or child custody agreement. For example, if the parents have equal custody, the parent who is responsible for completing the FAFSA may depend on whether the FAFSA is filed on an odd or even day of the calendar year.