Results 1 to 10 of 10

Thread: Need Help- Taxes/Instate Tuition Problem

  1. #1
    Veteran Member luckischalk's Avatar
    Joined
    Nov 2004
    Location
    Chicago, IL
    Posts
    603
    Thanks
    20
    Thanked 20 Times in 19 Posts

    Need Help- Taxes/Instate Tuition Problem

    I have a huge problem. I filed my taxes way back in January but only on a regular job I had for 5 weeks during the year totalling approx. $3200. I did not intend on the time at paying taxes on my dancing, however, now I am being denied instate tuition in the state of Florida because I am not financially independent. I have been a resident in this state for the past 2 1/2 years so I really should qualify but this whole financial independence is ruining everything.

    I am starting work on my MBA in August and it will be about $8800 a semester, I have a grant for $1000, and I have accepted loans for $2000 a semester but that still leaves $5800 I will have to come up with for each semester. I didn't pay taxes on dancing and now I am screwed.

    My question is should I amend my tax return, have a CPA do it and pay on the $27,000 I made dancing last year OR should I just save up the money for each semester and take out of state tuition for this year. I intend to start working as a waitress at another club next month so this issue will only be relavent for this year. As a waitress it is a lot easier to be honest about how much you make and just have them take it out of the small check you receive for your wages. I do not know what kind of fees I will have to pay for an amendment and how closely the IRS will scrutinize my returns in future years. I have gotten myself into this mess because of my stupidity and any information you can provide would be great. I really appreciate it!!

  2. #2
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Need Help- Taxes/Instate Tuition Problem

    Forgive me for being 'dense', but if you're not considered to be financially independent what ARE you considered ? A dependent of your parents who live in a different state ? And as a dependent of your parents, the state of Florida considers your legal address to be your parents' address in a different state thus the 'out of state' tuition charge ?

    I'm not going to advise you toward a particular course of action, but I will point out a few facts, legalities, and best guesses based on the above assumptions being correct -

    - the law requires you to report all income.

    - filing an amended tax return where the reported income jumps from $3,200 to $30,000 will probably raise some IRS eyebrows.

    -filing an amended tax return where the reported income jumps from $3,200 to $30,000 will very likely jeopardize your parents tax return as well if they claimed you as a dependent - particularly if your amended tax return lists a Florida address to prove residency. This can very well lead to an IRS audit of both you and your parents' tax returns.

    - if denied the right to claim you as a dependent because of your new 'financial independence' amended tax return being filed, your parents will likely get a bill for additional taxes due, probably a few thousand dollars worth.

    - if you file an amended return where your own reported income jumps to $30,000, you yourself are likely to find that you owe $6-8-10,000 in additional income taxes plus penalties on that additional reported income (both for failure to pay estimated taxes every 3 months and for failure to pay by April 15th).

    - if you file an amended tax return where your reported income jumps to $30,000, this may conflict with the info you already provided to the gov't when applying for your grant and/or student loans, which could concievably affect your loan/grant eligibility resulting in a request for immediate payback and denial of future subsidized loans and grants, and which could also concievably result in fraud charges being brought against you.

  3. #3
    Veteran Member luckischalk's Avatar
    Joined
    Nov 2004
    Location
    Chicago, IL
    Posts
    603
    Thanks
    20
    Thanked 20 Times in 19 Posts

    Default Re: Need Help- Taxes/Instate Tuition Problem

    I am an independent that is how I am able to be able to make all the other instate tuition requirements. My parents do their own taxes and do not claim me. Sorry I forgot to post that.

  4. #4
    Veteran Member Gerina's Avatar
    Joined
    Jun 2004
    Location
    San Francisco
    Posts
    253
    Thanks
    0
    Thanked 1 Time in 1 Post

    Default Re: Need Help- Taxes/Instate Tuition Problem

    I'd defintately grab a cpa and pay out the ass this year. It might have been a lot easier if you did this before 4/19 but you'll know better next year. As Melonie's mentioned, there are major repurcussions to outright tax evasion, and since you really need the money right now it might work out best to declare your last year's income. It will possibly set a red flag, but so will a dramatic increase in income this year for when you file your next tax return. I'd imagine a good cpa could help you weigh out the pros and cons in each scenario. In any case, an increase in income won't matter if you can defend yourself as having made exactly what you reported last year - did you post you didn't on an online forum J/k, but you should really check out your paper trails for last year and ensure they match your return before you leave it as is...or you could just drop out of school
    ...and the day came, when the risk it took to remain closed in a bud became worse than the risk it took to blossom.

  5. #5
    God/dess montythegeek's Avatar
    Joined
    Oct 2003
    Posts
    2,103
    Thanks
    0
    Thanked 9 Times in 5 Posts

    Default Re: Need Help- Taxes/Instate Tuition Problem

    Luck,
    As I read this document from the UCF, there are explicit requirements under state law including an appeal process.
    http://www.physics.ucf.edu/FL-Residency-and-Tuition.pdf

    Be sure to read this carefully and ask the folks at the registar's office about the process before you do anything. Ask for any publications they have explaining the process and find out under which criterion you were denied resident status.

    Find out if other documentation like past utility bills or rental leases can suffice.
    THEN talk to a CPA.
    Best of luck.


    PS For anyone else this is an example of why trying to fly under the radar can cause you to crash.

  6. #6
    Veteran Member luckischalk's Avatar
    Joined
    Nov 2004
    Location
    Chicago, IL
    Posts
    603
    Thanks
    20
    Thanked 20 Times in 19 Posts

    Default Re: Need Help- Taxes/Instate Tuition Problem

    Thank you so much for the advice!! You are right I have learned my lesson about paying taxes. I definitely think I am going to try and pursue getting instate tuition further. The whole time I got my Bachelor's degree I got instate tuition I will have graduated two years ago in Aug. when I am going back to school and they said if you have been out for more than a year they completely reconsider you.

    I think according to the actual statute there is no doubt in my mind that I qualify. I do have independent status according to my tax return and I do not think it is up to one person at this school to say that what her idea of financial independence is is more important than the IRS.

  7. #7
    Veteran Member
    Joined
    Feb 2005
    Posts
    230
    Thanks
    0
    Thanked 3 Times in 2 Posts

    Default Re: Need Help- Taxes/Instate Tuition Problem

    As Melonie said I don't quite understand the "not financially independent" thing. I am more familar with dependency when it comes to taxes, then it is pretty cut and dried either you meet the "dependency tests" in the tax code to be someone elses dependant or you don't. It is also not something that is up for negotiation IE "I live on my own and support myself but I still let my parents claim me and I don't.

    Do you think the reason that you are not being considered 'independant" because of your low income level? If that is the case then that would be a reason to consider filing an ammended return. Be very aware of the fact that this will raise the most major of red flags with the IRS, it is one thing to file an amended return because you didn't understand a certain deduction and computed an amount wrong or just made a simple math error, but if it is only for the purpose of "suddenly" claiming" 27K of cash earnings that is something else, you are basically standing up and waving your arms and shouting at the top of your lungs to the IRS that you cheated on your taxes.

    I would never advise anyone to cheat on their taxes, but on the other hand you have already made that bed and it may be better to lie in it with your sleeping dogs.

    It would be only the most minor of red flags if any, if when you file your 05 return it is for 30K, people get new high paying jobs all the time. You don't get W-2's and if you were going to get a 1099 from your club you most likely would have by now, so who is to say that you didn't start dancing in Jan. The only thing you would have to worry about is if you did get selected for some kind of random audit on your 04 or next years 05 return and they looked at your bank and credit card records and could show that you had spent far in excess of your claimed amount then you could be in trouble.

    Also keep in ind what Melonie said about the grants and loans you got, they were based on your 3K income, at 30K you most likely don't qualify for them. Your best case scenario is they would just want the money back and want it back in full IMEDIATLEY. The worst case is you could be prosecuted for fraud.

    It is not a good situation and there are no good choices now.

  8. #8
    Veteran Member Gerina's Avatar
    Joined
    Jun 2004
    Location
    San Francisco
    Posts
    253
    Thanks
    0
    Thanked 1 Time in 1 Post

    Default Re: Need Help- Taxes/Instate Tuition Problem

    I would not worry about getting prosecuted for fraud, since financial aid for2004-05 year is based on 2003's earnings. Last year's earnings (2005 return) will only matter for your 2006 Fafsa, filed between Sep '05-Feb '06. However, it is also something to consider, in the sense of whether you need anyone else to be paying for school ? I am particularly biased, since I went to a private school, myself; and, to me, $9,000 really isn't a whole lot to be taking out in loans per year. When you're out, you could always say for yoiur resume that you decided to "take a year off" and travel the country, while really paying your loans off stripping (and paying the taxes).
    ...and the day came, when the risk it took to remain closed in a bud became worse than the risk it took to blossom.

  9. #9
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Need Help- Taxes/Instate Tuition Problem

    Do you think the reason that you are not being considered 'independant" because of your low income level? If that is the case then that would be a reason to consider filing an ammended return. Be very aware of the fact that this will raise the most major of red flags with the IRS, it is one thing to file an amended return because you didn't understand a certain deduction and computed an amount wrong or just made a simple math error, but if it is only for the purpose of "suddenly" claiming" 27K of cash earnings that is something else, you are basically standing up and waving your arms and shouting at the top of your lungs to the IRS that you cheated on your taxes.
    After reading the U of Florida link that Monty posted, it appears that this is precisely the problem. The school is apparently allowed to rule on 'Academic Residency' independent of any other gov't agencies. I take it that the U of Florida's long list of 'proofs' is intended to cut off tuition scams such as simply renting a cheap apartment for a year preceding college enrollment (which would cost less than the in-state vs out-of-state tuition differential) without the student actually living and working in Florida.

    As to 'waving your arms' in front of the IRS, I was trying to put that point in more tactful terms. But yes filing an amended tax return where the declared income increases by 800% over the previous return is pretty much guaranteed to draw some personal attention. However this is not necessarily a bad thing if other financial 'ducks are in order' i.e. student grant and loan applications.

  10. #10
    Veteran Member luckischalk's Avatar
    Joined
    Nov 2004
    Location
    Chicago, IL
    Posts
    603
    Thanks
    20
    Thanked 20 Times in 19 Posts

    Default Re: Need Help- Taxes/Instate Tuition Problem

    I just wanted to thank you Monty. I did file an appeal and the committe met today and approved me for instate tuition. I really appreciate all of your information and advice. You have saved me at least $14,000. You are the greatest!!!

Similar Threads

  1. $1889 Tuition Due in 7 Days
    By Jazelle in forum Other Work
    Replies: 23
    Last Post: 06-23-2010, 07:52 AM
  2. 32% tuition hike in California schools
    By Deogol in forum Dollar Den
    Replies: 7
    Last Post: 11-22-2009, 07:24 PM
  3. PL offers to pay tuition?
    By Cherry Valence in forum Stripping (was Stripping General)
    Replies: 29
    Last Post: 07-23-2008, 10:38 AM
  4. Are you f*ing kidding me?: Tuition costs
    By TigersMilk in forum The Lounge
    Replies: 83
    Last Post: 09-29-2007, 09:22 PM
  5. Tuition/School help!!! (long, but please read I need advice!)
    By scarlett_vancouver in forum Dollar Den
    Replies: 29
    Last Post: 10-17-2004, 12:03 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •