FAFSA Basics: Divorced Parents

Divorced parents who share custody of their children often wonder who should fill out the FAFSA. And even in cases where custody is not joint, there may be questions.

In general, it’s best for the lower-earning parent to file the FAFSA. However, alimony and child support– which are reported as income– might make the income gap smaller than it appears. Plus, any money the non-custodial parent pays toward college, including distributions from a 529 owned by that parent, need to be reported as student income which could end up making the financial picture even worse.

The custodial parent for FAFSA purposes may or may not be the parent who is given primary custody in the divorce decree or who claims the student on their tax return. The FAFSA instructions state:

“If your parents are divorced or separated, answer the questions about the parent you lived with more during the past 12 months. (If you did not live with one parent more than the other, give answers about the parent who provided more financial support during the past 12 months or during the most recent year that you actually received support from a parent.)”

Remember that even in situations where custody is shared equally, there are 365 days in a year which means that the student must have spent at least one more night with one parent. However, that does not mean that the Department of Education is going to request sleep logs from your student.

Parents who agree that it’s better for a particular parent to be the custodial parent for FAFSA purposes should ensure that a reasonable case can be made that that’s true. For example, the custodial parent for the FAFSA should reside within or very close to the student’s school district.

And don’t forget, the CSS Profile will request financial information from both parents.

Amicably-divorced parents should discuss the tax-related issues of claiming the student as a dependent as well. For example, only the parent claiming the student on their tax return is eligible for the AOTC. For single or head-of-household filers, the AOTC phases out beginning at MAGI of $80,000.

See The FAFSA What it Does and Doesn’t Do for more insights.