If you hold a joint asset with a parent or a group, you must report the joint asset on the Free Application for Federal Student Aid, or FAFSA. While joint assets may affect and possibly lower your student aid eligibility, it is important to report financial accounts correctly on the FAFSA form. Failure to report a joint account accurately can lead to IRS audits and financial aid discrepancies.
Split jointly held cash and investment accounts evenly, and report the most up-to-date terms of their value. If you hold a joint account with a parent, you must report 50 percent of the account's value as your own, and your parent must report the remaining 50 percent as his asset when you complete your FAFSA, according to the Information for Financial Aid Professionals website. The student must enter his portion of jointly held cash or investment accounts as the answer to question 40 in step two of the student section of the FAFSA form. The parent should enter his portion of jointly held cash or investment accounts as the answer to question 88 in step four, the parent information section of the FAFSA.
Report assets held by a group according to the share of the assets you own. For example, if you are a member of a five-person investing group or business, only report one-fifth of the investment group’s or business' net worth on your FAFSA. You must report debts on group assets in the same proportion. If your parents are part of the same group-held asset or business, they must report the portion of the asset they own on your FAFSA application. The student must enter her portion of the group held business or investment as the answers to questions 41 or 42 in step two of the student section of the FAFSA form. The parent should enter his portion of jointly held cash or investment accounts as the answers to questions 89 or 90 in step four, the parent information section of the FAFSA.
List the value and income from custodial accounts as the student's assets on the FAFSA. There are no special tax exceptions regarding custodial accounts. These accounts are reported on the child’s tax return, and are therefore considered an asset of the child. Since a custodial account is an asset of the student, it can greatly impact student aid eligibility. However, if you have a 529 college savings plan, as long as you are a dependent, you can treat this type of custodial account as an asset of your parents, according to FinAid. If you have a 529 college savings plan, your parent must enter the asset as the answer to question 92a in section four, the parent information section of the FAFSA. All other custodial accounts must be entered as the student's under question 44a in step two of the student information section.
If you believe you incorrectly reported a jointly held asset on your FAFSA, you can make a professional judgment adjustment to rectify the error.