Hi Kathrynd.

This doesn't sound at all right to me. From quick googling I find:

If your parents are separated or divorced, the custodial parent is responsible for filling out the Free Application for Federal Student Aid (FAFSA). The custodial parent for federal student aid purposes is the parent with whom you lived the most during the past 12 months....Note, however, that any child support and/or alimony received from the non-custodial parent must be included on the FAFSA.

It shouldn't have anything to do with who claims SS as a dependent on their taxes.

My guess is that they are scheming some way to game the system. I hope SO says no; I do not like lazy, entitled people trying to get extra at the expense of others.

Thanks! (me too about the lazy entitled people)

I found out some things too...some are conflicting.
1.
If your parents are separated or divorced, the custodial parent is responsible for filling out the Free Application for Federal Student Aid (FAFSA). The custodial parent for federal student aid purposes is the parent with whom you lived the most during the past 12 months. (The twelve month period is the twelve month period ending on the FAFSA application date, not the previous calendar year.) Note that this is not necessarily the same as the parent who has legal custody. If you did not live with one parent more than the other, the parent who provided you with the most financial support during the past twelve months should fill out the FAFSA. This is probably the parent who claimed you as a dependent on their tax return.

2. If your parents are divorced, you need only list one parent's income on the FAFSA (Free Application for Federal Student Aid), even if both of your parents plan to help you out with your education. This income is used to calculate the EFC (Expected Family Contribution). The lower the parental income, the lower the EFC, and therefore the higher the amount of loans and free money that you will be rewarded. Pick the parent who makes the least amount of money, but keep in mind that if your parent has remarried, you will have to declare your steparent's income as well.

In number one - it would be their father, for he pays the most for their support.

In number two - it would be their mother, for she makes the least amount of money, including the CS.

I am going to go directly to the federal site and find out the requirements.

Thanks! you got me started....

FAFSA is a free Federal application for student aid. It is a formula for computing Expected Family Contribution (EFC). Low EFCs can allow the student and family to receive Federal funding for college, including grants, subsidized loans, and unsubsidized loans. In addition, colleges use the EFC to administer their own grants and scholarships.

Pick the parent who makes the least amount of money,

That's completely wrong. The rules for FAFSA are quite clear, and there are severe penalties for fraud. Approximately one third of FAFSA filings are audited. You do not want to be in a situation where you've contributed to a fraudulent filing and your SS is kicked out of school.

Here are the rules:

The custodial parent files FAFSA. The non-custodial parent's financial information is not included. Who claims the student on taxes is not relevant.

The custodial parent is the parent with whom the student lived the most during the past twelve months. The term "past twelve months" is relative to the date the FAFSA was submitted. It is not the previous calendar year.

If the student lived with neither parent or didn't live with one parent more than the other, the custodial parent is the parent who provided more financial support during the past twelve months, or during the most recent year during which the student received support from either parent.

Some colleges (about 300) will require the CSS Profile form in addition to FAFSA. Most of these colleges will not require non-custodial information, but about a third of them will. They define the custodial parent in the same way as FAFSA.

If your SS lived with his mother more than with his father, then it's the mother who files FAFSA. The question of who claims the SS on income taxes has nothing to do with FAFSA; it's a different issue entirely.

Here is a link that might be useful: More information on financial aid.

If I'm not mistaken (and I'm no tax expert, so please check yourself), federal income tax law has changed and under the new/current laws, the *custodial* parentis the one who gets the deduction *even if* the parents have agreed otherwise...

I'd check into it, see if you have to give up the deduction anyway -- then maybe see if you can negotiate get something in return for the 'favor' ;-)

Whoever child lives with files FAFSA. If and when child already lives on campus, then either parent can file FAFSA.

Parents who claim kids as dependent have to be able to show that more than half of kids' life expenses come from that parent's pocket. Kids don't need to live with either parent. It does not matter.

If you have no proof, then you better don't claim them. Can dad show that more than half of kids expenses (cost of living, rent or mortgage, food, clothing, schooling and etc) comes from his pocket? I am not sure how can he show that if he didn't even see them for a year. Does he pay more than half of their rent, or mortgage, food, clothes etc? Normally whoever kids live with, claims them because it is easy to prove that you are supporting them even if it is just roof about their heads. If kids live on campus or rent apartment at school, whoever spends the most on kids claims them, again if they can prove it.

The definition of "custodial parent" can be confusing because it's different for FAFSA and for Federal taxes, not to mention it has a specific definition for court-ordered custody situations such as legal custody and physical custody. The rules are pretty clear, however, and are fairly straightforward if the child lives mainly with one parent.

For FAFSA, the custodial parent is whoever the child lives with most. For children who live with one parent most of the time while they attend high school, then that parent is custodial and fills out FAFSA. If the child is in college and lives with each parent during breaks, it's the parent with whom he or she lives with most during breaks that is the custodial parent.

It's a little more complicated if the child splits his time equally between the 2 parents, or doesn't live with either parent during college breaks. At that point, the parent who provides most support is the custodial parent.

If the parents provide exactly the same amount of support, then there are additional criteria to determine who is the custodial parent for FAFSA.

Here are the specific rules:

1. The parent with whom the child lived the most during the past 12 months (the 12 months ending on the FAFSA application date).

2. The parent who provided more financial support to the child during the past 12 months.
3. The parent who provided the most financial support to the child during the most recent calendar year for which either parent provided more support to the child.
4. The parent who provided more than half the child's support (and will continue to do so).
5. The parent who has legal custody.
6. The parent who claimed the child as a dependent on their tax return.
7. The parent with the greater income.

Criteria 1, 2 and 3 are used for determining the custodial parent, with the first criteria being primary. In a situation where the parents split all costs equally (without even a penny difference), criterion number 7 is often used.

http://www.finaid.org/questions/divorce.phtml

For Federal income taxes, the divorce decree or separation agreement is the governing document. If the decree/agreement is silent on this matter, the parent with custody for more than half of the year is considered the custodial parent and claims the child as a dependent. If there is no formal decree or agreement, then the custodial parent may give the non-custodial parent the right to claim a child as a dependent by signing IRS Form 8332.

A change in the law in 2009 allows a custodial parent to revoke that right by filling out part 3 of Form 8332. The form must be delivered to the non-custodial parent by Dec. 31 of the tax year prior to the tax year you want the change to take effect

Here is a link that might be useful: New rules for children of divorced parents

if a child is already 18 but still is dependent due to college attendance then what is custody to do with it?

there is no custody agreement for a 22 year old college student.

whoever provides more than half of kid's life expenses can claim them.

22-year-old could live on their own and yet be a dependent. and no, kid does not even have to come home for breaks, they can stay where they are at (dorms, apartments, friends)or go visit grandma. who they live with is irrelevant. whoever provides more than half of their cost of living, claims them as dependent.

There are reasons why it's important to understand the definition of custodial parent. For FAFSA, it's because approximately 1/3 of applications are audited, and there are severe penalties for fraud. Better to be informed and file correctly the first time around. In the original poster's situation, the mother is the custodial parent, regardless of who provides more of the son's support. Students are considered dependents for FAFSA until age 24.

For Federal income taxes, it appears that the original poster's SO has an agreement in place:

he was allowed to claim head of household and both children as dependents

Again, this has nothing to do with who provides more support. Divorce decrees/agreements, if in place, are the governing documents and supercede IRS rules.

So in a sense you're right, parent_of_one, legal custody doesn't really have a lot to do with the definition of "custodial parent" for FAFSA and Federal income taxes. But it's not always as simple as figuring out who provides the most support when determining who the custodial parent is in these 2 areas of the law.

in areas of claiming on income taxes it is important who provides support because you could be audited and you have to show how much you provide.

if a kid lives with you, it is very easy to prove because you provide roof about their head, it is much harder to prove if a kid does not live with you. Mom pays rent or mortgage, gas, water, utilities for the house she shares with kids?

when i claimed DD on my income tax I knew I had to be able to show receipts or other documentation showing exact amount of money i am providing and it has to be more than a half of DD needed for surviving. Nobody asks what kind of agreement you have with your exes, you have to show financial proof (of course only if you are audited).

i was never audited but my tax attorney always discussed with me what documentation I should keep in case it happens.

In OP's situation I do not understand who allowed dad to claim them as dependents if they live with mom and he never sees them, even if he sends them money, how are they his dependents? and if he also plans on filling FAFSA on them, i could see why they are concerned. There is nothing illegal for them wanting mom to file FAFSA, they don't even see their dad.

Yes it does make a big difference who provides more support in case either one of them is audited. Just because they make some agreement it does not make it legal. He better has a proof. and if he does not want mom to file FAFSA or claim them well then maybe he should pay for their college.

parent_of_one I don't think you're following what I'm saying about divorce decrees. Can you provide a link to an official website that supports your opinion that only the parent who provides the most support can claim the child as a dependent on his or her taxes? Feel free to start with the link below.

Getting back to the original post:
Ok to the question : on Jan 1, SO gets an email from his son asking him to stop claiming both children as dependents. The reason stated is that he is a junior in HS and is exploring financial aid for college and if SO continues to do this, it will hinder his applications. His grades do not reflect college material, but I can't go there now. We have no idea how he will get admitted.

The OP's main question seemed to be about the relationship between claiming someone on taxes and filing for financial aid, which has been covered above.

In the OP's situation the mom appears not to be working, and is clearly the custodial parent for FAFSA. It's actually to everyone's benefit that the mom file FAFSA - the mom, the dad, and the son will all end up paying less for college than if the higher-income father were the one filing (assuming there's no rich stepfather in the picture - his income & assets would be reported on the mother's FAFSA). The son might even be eligible for an automatic zero EFC. In that case he'd be offered the maximum Federal aid (a Pell grant, subsidized & unsubsidized Staffords), plus any need-based aid that New Jersey offers. He would also be eligible for any need-based aid offered by the college (if any). This is important because the OP implies he won't be getting any merit aid.

Here is a link that might be useful: Who Gets to Claim a Child as a Dependent?

I would just make a pit stop in your local (probably community college because they are smaller and you can find the financial aid office easier and ask)

I have filled out the fafsa for the last two years and will have to do so again at the end of this month and always always have to include tax information including w2's and the like to the college itself... so it is confusing to me the info that annkathryn is citing (not to say it is wrong) says it has nothing to do with the taxes and who claims the child as a dependent. Based on the information I have to fill out it would seem that it would matter who is claiming the child as a dependent... I would just go to the college directly and double check.

Sorry if what I said was confusing. I'll try to clarify for the case of children with divorced parents.

The parent who fills out the parent portion of the FAFSA for a dependent student is the parent with whom the student lives most. This is FAFSA's definition of the custodial parent. That may or may not be the same parent who has legal custody or who has claimed the student as a dependent on his or her taxes. In most cases it's the same parent, but not always. Colleges only look at rule 6 that I cited above (6. The parent who claimed the child as a dependent on their tax return. ) to help resolve who the custodial parent is in cases where the child doesn't live with one parent more than the other, or where both parents provide exactly equal support.

FAFSA is a Federal form that gathers information about income and assets of the custodial parent. In order to fill it out, the custodial parent enters information such as AGI and Federal taxes directly from lines on their 1040 into the FAFSA form.

30% of FAFSAs are randomly selected for verification. When you are verified you have to provide supporting documentation for the information provided - signed copies of tax returns, etc. Some schools verify 100% of their students.

Thank you all for valuable information. My apologies for disappearing- crazy busy at work. It's late for me right now and I am getting stupid tired, but I didn't want you all to think I am a hit and run poster.
I want to re-read the above and digest. I did find the FAFSA app on line and am reading that also.

annkathryn, you have great info here. I like the way you spell your name. =)

I am the logical one in this situation - everyone else is emotionally clotted, so I have to go through this step by step. As an accountant, I never entertain fraudulent info on any form, let alone federal ones. This is why his ex's thinking and lifestyle is so foreign to me.
Thank you again and I will be back. It just might not be immediately. Take care all.

"The parent who fills out the parent portion of the FAFSA for a dependent student is the parent with whom the student lives most."

It isn't true. College student could live on campus or apartment by college and NEVER stay at home during breaks or stay at grandmas/aunts/brothers, whoever. Who kids live with is completely irrelevant to FAFSA information. Whoever claims them as dependent files FAFSA. In terms of claiming kids as dependent, once again where they live at is irrelevant as long as you provide more than half of their life expenses, it does not matter where they live.

That's why kathryn's SKs are upset, they don't live with dad and never see him yet he claims them on taxes and they worry he will file FAFSA and they will be denied help.

If dad has no problem stop claiming them, then he should stop. As about grades, community colleges and some 4-year-colleges will accept students with any grades, as long as they have high school diploma.

parent_of_one, with all due respect, your definition of custodial parent for purposes of FAFSA is incorrect. Please supply a link to an official website to corroborate your opinion. Here's another one you can start with:

http://www.finaid.org/questions/divorce.phtml

In addition, this is from the founder of finaid.org:

Dependency status for federal income tax purposes and for federal student aid purposes differ significantly. The IRS bases dependency status on the Internal Revenue Code of 1986. The US Department of Education bases dependency status on the Higher Education Act of 1965.

Instead of basing dependency status on whether a parent claimed a child as a dependent on their federal income tax return, the Fafsa considers a laundry list of criteria that are not as prone to manipulation.

The parent the student lives with most is the first criterion on the list (see list above).

Here is a link that might be useful: Answers to questions regarding financial aid.

Children do not have to live with anyone to qualify as dependents either for tax deductions or for FAFSA.

"Who they live with the most" is not a valid criteria in many situation since first of all they could live equally with both parents, or live with neither parent.

Neither DD nor SDs lived with any parents during college years yet they were dependents for both tax and FAFSA purposes. My child as well as stepchildren all attended and graduated colleges.

Rather than providing generalized links that do not apply to individual cases, I have actual individualized written information provided by our tax attorneys, Universities financial offices etc I am not going to scan it and post here, it would be ridiculous to disclose kids' names on this site.

I find it somewhat strange that you never posted here, never discussed any stepfamily issues yet keep supplying same links for this particular threads. These links are not anything unique or hard to find, everybody knows what FAFSA is, I still pay my own graduate loan so it is not some unknown info, but it does not apply to each individual case.

Annkathrn has been posting as far back as 2008, and she is absolutely correct in what she has posted...

It looks like you got a lot of feedback and help regarding FAFSA.

I am writing to tell you how sad I feel for you SO (not sure what that stands for). It is so sad his kids are that way. You sound very supporting and your relationship sounds very strong.

I really hope things go well for you guys and that they don't end up scheming you. Good luck and hang in there:)

dotz, children could live with either parent, no parent, both parents equally, by herself/himself, with siblings, at grandmas, on the street. they don't have to live "most of the time with one parent" in order for a parent to file for FAFSA or claim them as dependents on tax return.

Sure, most of the time that parent would be the one who they live with, but it is not the rule. Websites provide only general guidelines that may or may not work for every single situation.

That's why I suggest it is essential one talks to tax attorney to determine if they can or cannot claim children on their return, and make an appointment with University financial aid office (preferably manager) and find out what needs to be done in their specific situation.

I don't advice people to base life altering decision on general rules that may not apply to their unique situation. Especially if a child does not live with a parent yet that parent claims them, it is essential to meet with an expert to determine correct steps rather than read websites and get themselves and their children in trouble.

thanks dotz ;-)

I've been around a while but don't post very often. Other posters are way better than I am with relationship advice, and I don't have very much step-family drama to work through (thankfully!)

I actually started lurking around 6 years ago when theotherside was posting - anyone remember her? I'm pretty sure she's the one who posted about collegeconfidential.com, which led me to do all the research I've done over the past 3 years on college applications and financial aid. At this point my sons are attending colleges that are great fits for each of their interests, and have been awarded merit aid to make them affordable.

DH and I are now trying to figure out what to do with an empty nest!

Update - a small one. Tomorrow night we are going to the HS for a presentation on student aid. I understand the FAFSA rules and requirements about custodial parents. We will see what we learn tomorrow night. I am uncomfortable going, but my SO (significant other) would like me to attend for my viewpoint/knowledge. Also, if the kids are there, he will be distracted.

PoO - I understand your good intentions, but you are assuming a bit. This has been years worth of crap - BM lying and scheming all the way. SO was given the HoH status because his ex was not working and 'on paper' she was not providing *any* support for her children - and still isn't.

We know she has $ from her family and is working under the table - actually running an illegal daycare at her apartment.
She wanted the MAX CS, so she would not come up with any income. She is slick, but she pushed the judges buttons and was told - if she stirs up trouble again, she will be assigned income, period. Long terrible never ending BS.

SO has been advised by several lawyers to let it be now, anything we do - report the daycare for instance - could harm his kids. Believe it or not.

His children not seeing him - is their choice, not his. He has offered everything - coming to their residence and picking them up for dinner, the day, special places, etc and it is always NO. We have wrapped gifts waiting for them and no, we won't mail them.
If their mother isn't involved, they won't do it. The brain washing is complete.

They want SO to come to the apartment, which he will not enter. In the past, she has fallen on the ground and claimed he hit her. I don't even like writing this - it is very upsetting. So I am done with that.

Thank you Bonnie, it is very sad. He will do what is best for his children - but he must take care of himself also.
He and I have been over and over this - with a counselor, lawyer, etc. We are strong together - his kids are the missing piece and we both hope someday they will come back.

Thank you all again - I truly mean it.

Update - a small one. Tomorrow night we are going to the HS for a presentation on student aid. I understand the FAFSA rules and requirements about custodial parents. We will see what we learn tomorrow night. I am uncomfortable going, but my SO (significant other) would like me to attend for my viewpoint/knowledge. Also, if the kids are there, he will be distracted.

PoO - I understand your good intentions, but you are assuming a bit. This has been years worth of crap - BM lying and scheming all the way. SO was given the HoH status because his ex was not working and 'on paper' she was not providing *any* support for her children - and still isn't.

We know she has $ from her family and is working under the table - actually running an illegal daycare at her apartment.
She wanted the MAX CS, so she would not come up with any income. She is slick, but she pushed the judges buttons and was told - if she stirs up trouble again, she will be assigned income, period. Long terrible never ending BS.

SO has been advised by several lawyers to let it be now, anything we do - report the daycare for instance - could harm his kids. Believe it or not.

His children not seeing him - is their choice, not his. He has offered everything - coming to their residence and picking them up for dinner, the day, special places, etc and it is always NO. We have wrapped gifts waiting for them and no, we won't mail them.
If their mother isn't involved, they won't do it. The brain washing is complete.

They want SO to come to the apartment, which he will not enter. In the past, she has fallen on the ground and claimed he hit her. I don't even like writing this - it is very upsetting. So I am done with that.

Thank you Bonnie, it is very sad. He will do what is best for his children - but he must take care of himself also.
He and I have been over and over this - with a counselor, lawyer, etc. We are strong together - his kids are the missing piece and we both hope someday they will come back.

Thank you all again - I truly mean it.

Regarding the claim on taxes/dependent/etc...

You absolutely can have it in the divorce decree who will be the one to claim the child for taxes.

I have also never been instructed to keep my receipts to prove I provide the greater half of my child's upkeep.

silverswood, discussion is about college/near college age young adults/adults who do not live with the parent yet are claimed as dependents.

Your child is very young. She lives with you full time and does not have any income, so of course her upkeep/roof above her head, her food, clothes, water, heat has to come from you, where else would it come from? No need for receipts, it is very easy to prove without a receipt.

If your kids are college students (or getting into college) and do not live with you but live: on their own, apartment by college location, on campus, rent apartment, live with other relatives, with the other parent etc, and most likely have their own income. In those cases if you claim them and you are audited you have to be able to show that you provide more than half of their upkeep.

It could be difficult to show if you don't keep a receipt.

For example if a child's cost of living: rent, tuition, food approximately adds up to $20,000 (random made up number), you have to show that you spend on them more than $10, 000. If they live with you, no problem: you pay mortgage, utilities, they use your furniture and they eat your food, so it all adds up. But if they live elsewhere, it might be harder to prove.

Yes one better holds onto their receipts in case they are audited. OP's SKs don't live with dad but he claims them. So if he does pay for more than half of their upkeep, he should be able to show it.

Now of course people take risks and claim whoever but it is all until they are caught.

Thanks Po1. I was able to read and comprehend the gist of the thread.

This conversation was about two things: Dad claiming children as dependents and dad potentially claiming children on FASFA.

You wrote:

"...in areas of claiming on income taxes it is important who provides support because you could be audited and you have to show how much you provide. when i claimed DD on my income tax I knew I had to be able to show receipts or other documentation showing exact amount of money i am providing and it has to be more than a half of DD needed for surviving. Nobody asks what kind of agreement you have with your exes, you have to show financial proof .

I disagree with your assertions and assure you they are not correct in every case.

You assume my child (and OP's children)'s fathers do not pay over and above child support (which my DD's father does, but in our divorce decree I claim her on taxes).

She is dependent on him because he does pay a portion of her upkeep. When it gets down to brass tacks I'd say we're probably pretty equal supporters of her, although if my time were factored in I would come out ahead. As DD spends a full third of the year with her father and he sends child support all year round regardless of where she is, I'd say he supports her pretty fairly.

If dad wants to claim your DD on his taxes, he technically can because it does not matter where the child lives and he pays CS. But if he is audited, he would have somewhat harder time showing that he pays more than half of her upkeep since she does not live with him. Not to say he does not support her, but showing that he supports her more than half of what she needs, could be somewhat complicated.

If you have a peaceful agreement between you two who claims your child, then usually there is no issue. But if one parent objects and writes a complain to IRS, then investigation could take place and then the receipts would come handy.

If a child is that young, does not attend college, does not live on her own, lives full time with custodial parent (maybe visits noncustodial parent for whatever duration of visits), does not have a job, then there is usually nothing much to contest. Since she lives with you full time and nobody contests you, you do not have to prove anything. But that's not OP's situation.

OP's SO does pay CS, but if he is audited or BM contests, then he will have to show how he spends more than half of what they need. She probably won't contest since she is involved in some illegal actvities. But it is better to be prepared.

BM and SO initially had an agreement that they will take turns on claiming SD (still in college). But BM was not spending a penny on SD and SD never stayed with her and almost never saw her. So agreement had to be dismissed. BM threw a fit. Her rationale was that one does nto need to spend money on kids to claim them and SO has more money (had before BM got hefty inheritance)and can afford not to claim any dependents. LOL I remeber her leaving screaming messages "You have a cleaning lady! What do you need tax return for!". LOL

It is not how it works. IRS and tax attorney clearly defined for him that he si the one who can claim SD because he would have no problems showing what he spends, BM would. Whoever spends more than a half gets to claim. Simple.

No, PO1, he "technically" can't. Not without me allowing him to or him going to court and getting our divorce decree changed. That's what I'm saying. A divorce decree absolutely can say who claims the child on taxes. It's a legally binding document.

There is nothing to contest because we've done that already. Over. Said. Done.

Your situation may be different because SO and BM had a "agreement". We have a legally binding document.So no, it's not "whoever spends more than half gets to claim".

And don't talk to me about Kathryn (OP) like you are privy to her situation above all others. Did you even read what she wrote?

"When he divorced...He was allotted 80%...of the childrens' support...he was allowed to claim head of household and both children as dependents. His ex has tried over the years to get him to stop this...To date we have never heard of his ex having a legal job. They have never been back to court for any revisions and he stills finances the majority of his kids expenses. "

Since OP's DH provides 80% of upkeep and BM has not had a job 'on the books' for years it seems pretty cut and dried to me. Usually "burden of proof" is placed on the person who contests: in this case it would fall on BM to prove she is providing more than 50% rather than on DH proving she isn't.

As an aside, I may not have a child of college age. But I am a college graduate, of which I financed myself and I do have experience in child support and tax returns, which is what I commented on.

Divorce decree is legal document, but it could be changed. Any legal provsiions could be changed if contested or law enforcement interfers etc

If people get divorced when their kid is 2 (for example)and 20 years later that kid is still someone's dependent, then to say that same divorce decree must stay in place for 20 years, no matter what, is just silly. In 20 years people's circumstances change and legal provisions could and would change. Divorce decrees and custody agreements could be changed if circusmtances/laws/income/residence etc changed.

Most people cannot possibly predict where their kids are going to live 20 years from now and what are they going to do and if they are even going to talk to you. Just because you claim them now, does not mean you'll be able to claim them later. Life isn't that simple. Your kid won't be always little, and maybe won't always live with you. Maybe you won't be able to claim her even if it says so NOW in your divorce decree.

I am not sure why you are saying that I think OP's SO does not have rights to claim his kids. If he pays more than half of their upkeep, sure he could as long as he has proof. He probably has receipts, CS checks, copies of checks he wrote them for things etc He has nothing to worry about.

If he is not auditted then he has nothing to worry about, nobody is going to ask him to show anything. But people are auditted randomly. IRS just randomly picks you. So it is always better to be prepared when kids don't live with you and especially if you never see them. Also if the mother wants to contest, dad has to have somehting that shows how he supports his kids.

"If dad wants to claim your DD on his taxes, he technically can because it does not matter where the child lives and he pays CS"

No. He can't. Not easily anyway. It does matter where the child lives to be claimed on taxes in lieu of court document, but regardless the IRS first looks to divorce documents and follows what was decided there. He would have to get the divorce decree modified. I'm not sure how much you think a kid is worth as a tax break but it sure wouldn't pay the attorney fees.

Claiming kids on taxes is not quite as lucrative as people make it out to be. It's a credit, first off, not a refund and it's $1,000 per kid. It would behoove the prudent person to make sure taxes were owed at the end of the year, not more than 1,000 per child, so that their entire credit could be utilized.

You wrote: "In OP's situation I do not understand who allowed dad to claim them as dependents if they live with mom and he never sees them, even if he sends them money, how are they his dependents? and if he also plans on filling FAFSA on them, i could see why they are concerned. There is nothing illegal for them wanting mom to file FAFSA, they don't even see their dad."

after I asked what makes them HIS dependents, OP clarified that dad does pay substantial amount of money and mom does not have legal income (she might be supporting he kids, but can't prove it since income is illegal). It is fine if dad is the only one who supports the kids as long as he can prove it.

At this point your ex would not see any reasons to change divorce decree but you never know what's going to happen in 10 years. DD might move in with him and he might want to claim her. And then both of you will have to show how you support DD. Things change.

I personally do not think it is worth it but I am not the one with the dependents/taxes/divorce decrees/custody/FAFSA issues etc. It is the issue for other people. So they have to be informed and prepared.

It is naive to say just because divorce decree says XYZ, everything goes. Things change and old divorce decrees often do not match reality, that's why people change custody agreements and divorce decrees and CS provisions all the time: because life goes on and things don't stay the same. Trust me.

Not sure how, if at all, the new 'rules' may apply to what you ladies are discussing, but thought I'd put them out here anyway. My 'too busy to pay attention' SS blew this one in his never ending 'verbal' and/or 'I thought I could' agreements with SGS's BM.

from the IRS New Rules For Children of Divorced and Seperated Parents:

Revocation of release of claim to an exemption. For tax years beginning after July 2, 2008 (the 2009 calendar year for most taxpayers), new rules apply to allow the custodial parent to revoke a release of claim to exemption that was previously released to the noncustodial parent on Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, or similar statement. The revocation is effective no earlier than the tax year following the year in which the custodial parent provides, or makes reasonable efforts to provide, the noncustodial parent with written notice of the revocation. Therefore, if the custodial parent provides notice of revocation to the noncustodial parent in 2009, the earliest tax year the revocation can be effective is the tax year beginning in 2010. You can use Part III of Form 8332 for this purpose. You must attach a copy of the revocation to your return for each tax year you claim the child as a dependent as a result of the revocation.

Post-1984 and pre-2009 divorce decree or separation agreement. If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. The decree or agreement must state all three of the following.

The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support.
The custodial parent will not claim the child as a dependent for the year.
The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent.

The noncustodial parent must attach all of the following pages of the decree or agreement to his or her tax return.

The cover page (write the other parent's social security number on this page).
The pages that include all of the information identified in items (1) through (3) above.
The signature page with the other parent's signature and the date of the agreement.
Post-2008 divorce decree or separation agreement. Beginning with 2009 tax returns, the noncustodial parent can no longer attach pages from the decree or agreement instead of Form 8332 if the decree or agreement went into effect after 2008. The noncustodial parent will have to attach Form 8332 or similar statement signed by the custodial parent and whose only purpose is to release a claim to exemption. The noncustodial parent must attach the required information even if it was filed with a return in an earlier year.

Here is a link that might be useful: New Rules...

Thanks for posting, justmetoo. This is probably what sweeby was referring to above, and is consistent with the link I posted from nolo.com. It's also why the OP's statement about notification is relevant: on Jan 1, SO gets an email from his son asking him to stop claiming both children as dependents January 1, 2011 notification would mean it's too late to change the 2010 tax arrangement.

kathrynd - how did the high school FAFSA presentation go?

Not to be pedantic PO1:

"after I asked what makes them HIS dependents, OP clarified that dad does pay substantial amount of money and mom does not have legal income"

Actually, OP posted this "clarification" in her original post.

"When he divorced, his wife was not working and trying to get disability. He was allotted 80% ...of the childrens' support. he was allowed to claim head of household and both children as dependents...To date we have never heard of his ex having a legal job...he stills finances the majority of his kids expenses...I have a gut feeling...she is doing something else illegally. "

And I'm perfectly aware that circumstances change. My point is that divorce decrees are upheld by the IRS.

You wrote:

In OP's situation I do not understand who allowed dad to claim them as dependents if they live with mom and he never sees them, even if he sends them money, how are they his dependents? ...Yes it does make a big difference who provides more support in case either one of them is audited. Just because they make some agreement it does not make it legal.

Annkathryn said "Divorce decrees/agreements, if in place, are the governing documents and supercede IRS rules."

I was making the point that my divorce decree says the same. My ex-husband is generous and I would probably be hard-pressed to prove I spend more money on DD. Yes, this could change at some point. Good thing I'm not living off my child support! /sarcasm. Since my divorce decree says I am the one to claim DD as dependent, that is what the IRS looks at first. If they were to audit me, the divorce decree would be sufficient for them and they would not need supporting receipts.

Do you know how much an audit costs? It's not 100% random. They look for markers, things that stand out...

justmetoo,
thanks for posting this, wow it would make a difference for noncustodial parent who is claiming the kids. OP's SO's ex was too late with notifications, January 1 is too late for 2010. I also wonder why is her son notifying dad rather than his ex. Maybe she thought dad would give up easier if his son asks for it? But it wouldn't be a legitimate notification anyways, has to be done by her?

I don't think neither SO nor his kids have anything to worry about. BM can legally file FAFSA, kids live with her full time and she has custody. It does not matter where dad lives or what he does. At some point kids might live elsewhere and custodial definition would not be sufficient, then they have to look into other facts.

But maybe SS would attend college locally (especially if his grades are bad he might even start with community college) and will continue living with his mother.