ROTC Scholarship Student Questions On Filing Independently

[jddigitalchaos]

Hi, my step-son is on a full tuition ROTC scholarship and we have been covering all his R&B and he lived with us over the summer so we filed him as a dependent on our return last year. His school and ROTC financial advisers have told him he is a contractor for the government now and advised him to file a return independently and to ask us to amend our return taking him off our return as a dependent. He was told this was because it will allow him to file an independent zero income FAFSA and allowing him to get more funding to help cover the cost of his schooling. The questions I have are as follows:

1) Is this allowed? I have not been able to find any supporting documentation on it or anyone else asking this question on this forum.

2) Would there be any penalty from the IRS with him filing so late since he didn't originally really need to file.

3) How much could he gain and for what purpose if he was able to file this FAFSA?

Thanks for your help!

[Bsch4477]

Scholarship funds do not count as support for determining eligibility for claiming a dependent so he did not provide more than half of his own support. Therefore you can claim him. Even if you chose not to claim him he would have to say that someone else CAN claim him if he had a filing requirement. 

[jddigitalchaos]

I understand that I can claim him, the question is whether he should file independently in order to get additional government support via FAFSA.

[Hal_Al · Accepted solution]

Q. I understand that I can claim him, the question is whether he should file independently in order to get additional government support via FAFSA?

A. No.  If he CAN be claimed, he cannot file independently.  That is, even if you don't claim him, he must check the box, on his form 1040, that someone can claim him.  Whether FAFSA will accept that is a question for them; but I doubt it. 

You said "His school and ROTC financial advisers have told him he is a contractor for the government now".  That's not correct, for an ROTC scholarship (there's a grain of truth for Military Academy cadets, but not ROTC). ROTC scholarships and monthly stipend students received from ROTC are, by law,  exempt from tax. His ROTC scholarship is not reportable income and, as others have said, it is also not counted as self support, for the dependent support test. 

You also said "he lived with us over the summer".  It matters where he lived prior to going off to school, whether it was with you and your spouse or the other parent.  A student is usually considered as still living with the same parent after he goes away to school.  But, either way, somebody CAN claim him and he cannot file "independently".

[jddigitalchaos · Accepted solution]

Thank you so much for your replies. I was able to find on the government student aid site that specifically calls out ROTC cadets aren't eligible for filing the FAFSA independently.

Also, BTW, he did live with us prior to going to school.