stay dependent or become independent?

[scrubswannabe]

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I am currently a college sophomore and my plan is to make about 40,000 dollars in the next two years of college, as money for medical school. That 40,000 I plan to use strictly for medical school. However, looking at wikipedia and the income tax brackets I see that if I make 20,000 a year and I continue to be a dependent on my parents tax forms - then they move up to the next bracket and this increase in taxes means my family takes home combined, less money after taxes, than if I never worked. That was interesting to me. Does this mean I should become independent from my parents - I don't even know how that can work as they are paying for my apartment expenses.

And a related but side question is that with me making this 40,000, the government probably won't give me any stafford loans right? Stafford loans if I recall are about up to 40,000 at a low very low interest rate. It seems if I don't work the next two years, I can quaify for that great loan, but if I work my ass off, I won't. It's kind of weird and I'm looking for a little direction - or maybe even books on this topic? Thanks in advance.

 

[scrubswannabe]

Any ideas?
Should I post this elsewhere?

 

[Sol Rosenberg]

Stafford Loans are not (completely) based upon financial need. If Bill Gates decided to go to Medical School, he could qualify for Stafford Loans up to his Medical School's cost of attendance (or the yearly max. of 28k.) What you MAY not qualify for is to have some of those loans be subsidized Stafford Loans (where the government pays the interest on the loan while you are in Medical School.) The Max. subsidized Stafford loan is something like 8k per year, and it is still quite likely that you may be able to shift some of that $40k income that you are planning on having so that you could still qualify.

I would think that it would be better for you, in terms of reducing your family's total tax burden, by remaining a dependent, because the exemption your parents would claim for you would be subtracted from income taxed at a higher tax bracket (I am assuming that your parents earn >> 40k/year) but this is just a guess on my part, and the real answer depends on all of the details of both of your (you and your parents') tax returns.