<p>In the book "Paying for College without Going Broke", it has this tip on filling out the "Income earned from work" portion.</p>
<p>"Although they don't look like it, for tax filers these are expense questions, in which case the only purpose of these questions is to compute how much social security tax you paid and to see whether you qualify for employment allowance. Therefore, you want these numbers to be as high as possible."</p>
<p>It goes on to say that the higher this number, the lower your contribution to college will be. So you have to include everything: wages, contributions to tax-deferred pension and 401(K), etc.</p>
<p>Is this true? I was only going to put down the wages on the W-2. Adding our 401K contributions will really make the figure go up. I suppose the author knows what he's talking about but I'm still nervous in case I didn't understand it correctly.</p>
<p>This strategy is recommended for both FAFSA and Profile btw.</p>
<p>Yes the line you are referring to is used to calulate your FICA/SS contributions. So put in all your earned income so they will then subtract the full FICA/SS value. This is a different number than your AGI which does not include your tax deductible contributions to your 401(k). You want a big - complete - earned income so they don’t short change the deduction for FICA/SS. Is that clear?</p>
<p>Income from work includes the amount reported on line 7 of the 1040/1040A (line 1 of the 1040EZ). In addition, the following are added to income from work: the amount reported on line 12 of the 1040, the amount reported on line18 of the 1040, and income from box 14 [code A] of Schedule K-1 (Form 1065) … unless any of these are negative, in which case they are treated as if they were 0.</p>
<p>You do not add anything else to this amount. The FAFSA explains what to include, and the federal verification guide explains this, as well. I’m not sure where the info re: untaxed payments to pensions, IRAs, etc is coming from … but it is not correct. These amounts are not included in income from work, and they ARE included as untaxed income.</p>
<p>It is ridiculous but true that the tax deferred money you put into retirement accounts (because you want to be able to live after you retire), is counted as INCOME for FAFSA and then will be taxed when you actually tax it out (assuming you don’t DIE before retirement).</p>
<p>Uncle Sam is double dipping.</p>
<p>I will make ~73.5K. My NET TAKE HOME PAY will be 40K after taxes (federal/state 3%/FICA/city wage tax of 4%), 5% contribution to retirement, health insurances)</p>
<p>the FAFSA doesn’t even come CLOSE to ‘calculating’ my state and city wage tax which is 7% of my GROSS pay of 70K+. No part of my income is protected from those taxes. my state has NO deductions or personal exemptions. And let’s not even discuss that the sales tax in the city of Philadelphia is 8% compared to 6% for the rest of the state.</p>
<p>At a summer info session at Smith College, I was quite shocked to learn that the contributions to 401 k count against us and that colleges assume that one does not need to make them and that the money really should be used to pay for college. It’s insane!</p>
<p>the ONLY good thing was that for 2 years of my FAFSA journey (did the final one in jan 2010) the $$ put into retirement reduced my AGI below 50K so they didn’t count my assets (and since I’m a single parent who has never received a nickel from my son’s father) which have LESS THAN HALF the asset protection of a married couple. </p>
<p>I work for the federal government (budget analyst), which makes knowing how much it sucks even more obvious</p>