I am applying for student financial aid, and I am not a dependent. I don't work and have no income, but my parents send me money for basic living expenses each month. I have saved about $30,000 over the past three to four years from the money I receive. My parents pay the gift tax, but will the money they gift me affect my FAFSA, and do I need to report it since it's a gift from my parents and not income?
I believe that gifts from your parents for living expenses do need to be disclosed on the FAFSA. This link takes you to the 2016-2017 FAFSA form. Please see Section 4 for an indication of money received or paid on your behalf. It is probably best to fully disclose this. Gifts from your parents are not guaranteed to continue, so an appropriate and full explanation would likely be helpful to you.
This link might also be helpful, along with the entire www.finaid.org web site. This explains some additional factors that might or might not be pertinent to your current situation.
You would probably benefit by meeting with the financial aid officers of your educational institution to discuss ways to optimize your financial aid. If this isn’t appropriate or effective, there are professionals that specialize in assisting students to maximize their financial aid eligibility for a fee. Also, www.finaid.org has a section that will allow you to pose a detailed question.
Your savings will need to be reported as an asset on the FAFSA form.
Good luck in your education and all you do!
Answered by: Robert C. Jazwinski, CPA, is president of JFS Wealth Advisors in Hermitage, Pa.