Is my sister a dependent for the purpose of the FAFSA?

Question

My sister is 18, not yet graduated from high school. She is a dependent, but she's my parents' dependent. They're getting a divorce and she moved in with me at the beginning of this year. I did not claim her on my taxes for last year because she wasn't living with me then, and I'm not going to anyway. But on the FAFSA, I need my parents' tax information, which I cannot get. However, if I support a dependent who lives with me, then I can be independent myself in FAFSA terms and not need my parents' information. She will be graduated by the time I go to college, and no longer a dependent.

This is the dependency question on the FAFSA:

"Do you have dependents (other than children or spouse) who live with you and who receive more than half of their support from you, now and through June 30, 2009 (question 52)?"

Can I answer yes to this? She's been living with me since January and I pay the bills. She has a job and pays for gas and groceries occasionally.

Answer 1

Answering "yes" to this question requires that your dependent (in this case your sister) must live with you "throughout the award year".

If you sister will be moving out at any time before the end of the 2008-2009 academic year (and/or you will not continue to provide more than 50% of her support throughout the entire period) you can not claim her as a dependent for FAFSA purposes.

Hope that helped.

Edit: Remember, she's a "dependent" if she's living with you AND you are responsible for more than 50% of her support. Dependency, in this case, has nothing to do with whether she's old enough to live on her own, or whether she could be working - if you're still picking up the tab, she's a dependent.

Be careful, though - you can't just claim this and cross your fingers. The Department of Education randomly selects up to 30% of all FAFSAs for "verification", and they select other FAFSA intentionally, if certain (unknown to the rest of us) "red flags" call attention to your submission.

It wouldn't surprise me if, after claiming your sister, you got a verification form from the Department, asking you for some type of supporting documentation. Question one would probably ask about whether you were claiming her as a dependent for tax purposes (which you have indicated you do not intend to do.)

If you were not claiming your sister as an income tax dependent, you would probably have a difficult time overcoming the presumption that you were trying to use her as a FAFSA dodge. ESPECIALLY - and I suspect that this is the case - if your parents are claiming her as a dependent on their tax returns.

I don't think the government expects you to be a fortune teller and know what's going to happen with your sister's situation, going forward. However, if you claim her (legitimately) as a dependent now, and at some point she either moves out, or begins picking up her own share of the expenses - you would be responsible for updating your FAFSA information, which would cause the Department to reassess your financial aid eligibility. If, as a result of the new information, you had been receiving assistance that you were no longer qualified to receive, you might well be required to pay back some portion of the "overage".

Answer 2

The key here is the 50% rule.  

She is not your dependent. You would still have to put 1 of your parents tax info on your fafsa (since they are seperated).  And she will have to do the same if she is going to college in the fall.  

This is a good thing because there will be 2 people in the family in college, plus at least 3 people in the household (you, your sister and 1 parent)... be sure to choose the parents income that also claims your sister on thier taxes... even if they won't claim you.  This is confusing yes, but it's the government.  People in the household are not those who actually live with the parent!!  LOL  Good luck.

EDIT: Updating bank info will make no difference.  Its just an address on a form.