Why would you not file? Your efc is still low enough to get some Pell and maybe state or college funds too.
Hopefully, your college will give grant money to you … many colleges provide institutional grants to people who are not Pell eligible but have a low EFC. Definitely file the FAFSA! And if there is no grant this year, keep filing - maybe the school will get an increase in the need based grant budget in the future & then possibly there could be a grant.
Your son does not qualify for PELL. That’s about all that’s guaranteed from filling out the FAFSA; that and subsidy of interest. What FAFSA does is make you and your son eligible for what federal aid is out there, and is necessary for school aid as well, since most every school requires it before you get ANY money even directly from them. So, you’ve lost out on PELL, which most people who do fill out from FAFSA do not qualify to get. There are still possibly other advantages.Your son cannot borrow money, get work study, get school need based aid without the FAFSA completed.
Batmom. FAFSA doesn’t provide aid. It determines your ELIGIBILITY for aid, mostly federally funded aid. However, colleges that use the FAFSA only also use the data to consider you for their school funded aid. And some states require this form for state funded grant money.
Your son’s Pell was reduced by $800. Can he get a part time job to help make up for this reduction?
He has a job that will start in April as a caddie for a golf course. He’s too busy at school to work year round. He will do work study when he starts college.
Annoying Dad, it was weird, when I filed and updated amounts on 1/30, I submitted and received acceptance. I was taken aback when son received email saying changes weren’t submitted. I didn’t realize in went from 1040a last year to 1040 this year, nor did I realize this makes a difference. If there was a line for 401k contributions, I would’ve filled it out.
Ok I looked at my corrections and no I didn’t have deductible contributions because I didn’t realize they were deductible… So saving a measly $2430 actually hurt me. SMH I will never understand this…I’m almost 50 and should be saving more. Can I avoid this penalty by doing Roth in future?
You haven’t actually seen a financial aid offer haveyou? It might not be much different.
I suppose a 401k ROTH might help a little instead of pre-tax 401k contribution because your income tax will be higher.
Consider alternating the years you itemize by doubling up on property tax, charitable contributions and state income tax every other year (to file 1040A in the years you are not itemizing, if that improves your financial aid).
Standard deduction for HOH in 2015 is $9250.
How much were your line items on Sch A for 2014?
I’m not following your logic. You’d give up saving $2400 in retirement savings hoping to get back $800 in PELL. However, having the higher AGI to begin with (no 401k contribution to add back in because it’s already in your AGI) may mean the lower PELL anyway. You may get a raises over the next 4 years taking you over the magic 50K number.
Basically, what I’m trying to suggest is that you do keep saving for retirement in your 401k (is there an employer match?) and not go through a bunch of gymnastics for $800.
Yes, I like that we can save for retirement pre-tax and employer matches 5%.
I still don’t understand why the AGI with retirement contribution is now over $50k, shouldn’t it add up to around $45k?
Also like madison85 asked, how much over the standard deduction were your itemized items?
I have not done every single combination of checking if NOT contributing to an IRA or 401 K would help with the financial aid, but the ones I have done, still puts the person in an overall win situation. If you put the money into a ROTH IRA, you still have to count that amount as income, you lose the tax deduction, and the only gain you have for FAFSA purposes is that you paid more in taxes. If you don’t put the money away ANYWHERE, you lose the tax deduction and again, you still have to count that amount as income. It’s not as though you are penalized for putting money into a 401K, that’s money you would have included as income if you did not. It’s an overall win when you do, but just not as much of one when you throw financial aid in the picture.
I guess you could but that money into a 529, get state deductions for it and then turn around and use it to pay your son’s tuition which would be saving some money if you are paying out of pocket.
Where you lose here is the loss of the simplified needs test by having to file a 1040 rather than the shorter forms. And not to do so would mean losing out on your mortgage deductions.
If there’s an employer match on a 401K, I think it’s a win to contribute, even if if means a smaller PELL.
But there could be a way to not itemize (every other year) and not lose the mortgage deduction (if the mortgage interest alone is less than the standard deduction). But it takes planning and enough cash flow to pre-pay the following year’s state income tax and property tax in order to double up in the itemizing year.
Even without an employer match, or if it’s an IRA, it’s a win to contribute.
Also if the itemized amount is only a bit more it might be worth taking the standard deduction to be able to file 1040 A and not counting assets.
mommdc, I’m not seeing that AGI is now over 50k, the OP lost the simplified formula for filing a 1040.
I think what is being thrown out there is that OP can file the 1040A and lose the deductions for her mortgage and whatever, if it’s worth not having the assets counted in the simplified formula. She would then get the standard deduction instead of the itemized ones.
@annoyingdad, yes I thought that the problem was that her income was now too high for simplified needs test, but rather it was filing 1040 instead of 1040 A. So I was wondering if it would be worth it to maybe not itemize.