You would think that I would know this by now, but I am not 100% sure. I just finished filing our taxes and was filling out FAFSA. I got multiple warning signs about my son’s income being very high. My son is a sophomore and has a lot of unearned income from scholarship money (basically, a full year of room and board). Should I just ignore these warnings about his high earnings (Lines 7+12+18) being very high and continue on? I will use DRT once it is available, but we were going to go ahead and file a preliminary FAFSA. Maybe we should just wait and do the DRT and file FAFSA afterward.
A full year of just room and board or did you mean tuition, fees, R&B and only the R&B amount is taxable? And you mentioned it being unearned income, I hope you know it’s earned income for the purpose of tax filing requirements and the standard deduction.
If you double-checked the numbers then I would file fafsa with them. Were the warnings for the AGI question? I can see perhaps a warning when you enter the amount of taxable scholarships reported to the IRS in AGI. A lot of people make a mistake there but you seem to actually have reported an amount to the IRS. I’m curious how high the income was to trigger warnings.
@annoyingdad - Yes, I am talking about the taxable portion of room and board. I did file with the numbers with his scholarship income included on line 7 of his 1040. My son’s AGI was around 17k with his R & B ($13k) added to his summer and school earnings (around 4k). I think I did it correctly, but whenever I get big red warnings when filing something, I like to check.
When you filed if you put SCH 13000 to the left on the wages line and included it in the wages line amount, then you would enter that amount for how much was reported to the IRS in AGI. So it sounds correct. If the warning didn’t specify a question, I think that one would be most likely because as I said, a lot of people make a mistake there and put all scholarships or whatever. Sounds like you’ve got it right.
Sounds correct, but then you are also going to report the amount of taxable grants/scholarships for question 44d. This will allow the formula to ignore that excess income for EFC purposes.
