<p>My son is not even a senior yet, I am just getting nervous about all this college stuff coming up, me & husband never went so this is all new to us. I heard somewhere you MUST TURN this Fasta thing in BEFORE a certain time limit to get the Financial aid or you just loose out for that year? Is this true, my question is --how can you do that if you do not have your taxes done yet? How does this work, can you turn it in and correct it at a later date-if have too, is this allowed--is all of this on the internet or through the mail system?? My son just wants to go to a State college close to home. Is it better to live there, do most kids not have a car? What about health insurance? When a child is enrolled in college, do most plans keep the strudent on there, and to what age? Any advice on Books, etc to read in preparation for all of these forms, time limits, how to save or not save your money in child's name in preparation for Fasta. Etc would be wonderful, thank you. Our income is approx $50,000 for whole family, we have other children, so we are not HIgh income. Thank you.</p>
<p>this is a good site
<a href="http://www.aip.org/pt/vol-56/iss-9/p38.html%5B/url%5D">http://www.aip.org/pt/vol-56/iss-9/p38.html</a>
FAFSA stands for
Free Application for Federal Student Aid</p>
<p>1) FAFSA - yes, you submit it with estimated numbers, generally based on your previous years' taxes, and then correct it when your taxes are done. FAFSA can be corrected on line. Most state schools only require FAFSA. However, some state schools and most private schools require an different form called the CSS Profile, which is submitted again with estimated numbers and then corrected by hand and resbmitted; corrections to the Profile cannot be made on line.</p>
<p>2) Whether kids live there or not depends on a number of factors, and it's one thing that you should ask on any tour you take. Do most kids live on campus? Do most kids leave campus on the weekends (this is often called a "suitcase school")? It's more a personal choice.</p>
<p>3) Most employer-sponsored health insurance plans cover full-time students until age 22. Check with your HR department to be sure.</p>
<p>4) Save money in your name, not your child's. Open a 529 that is in your name with your child as the beneficiary. Assets in your name are "taxed" at 5.9% available for college; assets in your student's name are taxed at 20% available.</p>
<p>Now - breathe! And stay cool - it will work out.</p>
<p>NOW is a very good time to get a copy of FAFSA and your last tax return, fill in the info and run it through an on line calculator. THere is one on this site. That will give you some idea where you stand, and what items stand out. With an income of $50k, you are right on the verge of having your assets not count if you are eligible to file a 1040EZ or 1040a, for instance. If you have money in your kid's name, he should spend it down, since his money counts more than your. Just some examples of what you can find out and fix, if you do a dry run early.</p>
<p>Basically, you need to file FAFSA. It does not become available for actual filing until the Jan 1 of your son's senior year, and deadlines can be tight for it. You have to estimate if you are not done with your taxes, and correct when you actually file your returns. Most people use the prior year's returns, adjusting for what they know has changed, using estimates on some of the changes. You can do it by mail, but it goes through much quicker on-line. FAFSA is a govt form that calculates your Expected Family Contribution (EFC) which is the number used by the federal and state govts for eligibility for govt grants, loans and work study. It does not mean that the amount is all you have to pay, unfortunately, because most schools do not provide 100% of aid. </p>
<p>For health insurance purposes, once your son reaches a certain aid, he is usually kicked off parents' insurance UNLESS he is a full time student. The insurance company will send an inquiry about this. Most colleges require proof of health insurance for their students and if you don't have adequate insurance, they will make you buy it from them.</p>
<p>You are in a wonderful position to do some research now, before your son is a senior. I recommend Paying for College Without Going Broke by Kalman Chany (Princeton Review). A new edition comes out every October. </p>
<p>I would also fill out one of the online EFC (estimated family contribution) calculators and see what number they come up with. Then you can play around with the numbers and see how that effects your EFC. It is very educational.</p>
<p>I was in your shoes a few years ago...I felt totally overwhelmed. My oldest son is now a freshman at UCB and received a great financial aid package (loans, grants and work study).</p>
<p>In our situation, it was best for my son to sign up with the campus health insurance policy. The campus policy covered dental (ours does not) and he needed his wisdom teeth extracted this year anyway.</p>
<p>Best to you.</p>
<p>If you google "FAFSA step by step" a great site comes up that can get you through that form and explains the lines in detail. If you have a little time, browse some financial aid books at the library and Borders so you can buy the updated version of the ones you like when the time comes. Current info is important since things do change.</p>
<p>As to the questions specific to a college, it so depends on the school. In our area, the commuting options tend to favor getting a car, especially if the student is going to work part time. That adds a lot to the cost as insurance is expensive here and there are all of those other costs that come with a vehicle. When calculating room and board costs, that is often a tradeoff, and many college calculators don't take that cost into account. Those schools that are residential with most kids not having cars (freshmen often not permitted cars if living there), tend to have more amenties and events on campus. It's nice to visit and look for things like that, as it varies so much among colleges.<br>
Good luck, and you are starting nice and early, so you'll be prepared. There are those out there just now asking what FAFSA is and how to apply for fin aid.</p>
<p>You are wise to be thinking of this in advance and this board is a great place to come to for advice. Wish I had started earlier. Some links relating to financial aid you might find helpful:</p>
<p><a href="http://studentaid.ed.gov/students/publications/completing_fafsa/2007_2008/ques.html%5B/url%5D">http://studentaid.ed.gov/students/publications/completing_fafsa/2007_2008/ques.html</a>
^^ step by step guide to filling out FAFSA</p>
<p><a href="http://studentaid.ed.gov/students/attachments/siteresources/0708EFCFormulaGuide.pdf%5B/url%5D">http://studentaid.ed.gov/students/attachments/siteresources/0708EFCFormulaGuide.pdf</a>
^^ Fafsa EFC formula - very long but interesting if you are like me and really need to know how they arrive at the numbers. Interesting information such as asset protection tables etc. This is this years - it changes annually.</p>
<p><a href="http://www.finaid.com%5B/url%5D">www.finaid.com</a>
^^ lots of helpful tips about financial aid including a pretty accurate EFC calculator.</p>
<p>Things I wish I'd known long in advance:
Parents with income below $49,999 who are eligible to file a 1040ez or 1040a may qualify for the simplified needs test which means assets are not taken into account in the EFC calculation. Parents with income below $20,000 who are eligible to file 1040ez/1040a may qualify for automatic zero EFC. Weird things may make you ineligible. In our case we overpaid our state taxes in the prior year and took deductions so the state tax refund we received is taxable income that we have to file a regular 1040 to report. Cost us a bit of money on the EFC even though the income figure were the same either way.</p>
<p>Odd little things can make a big difference.</p>
<p>Assets in students name = 20% goes towards EFC - no protection
Assets in parents name = 5.6% goes toward EFC - protection depending on older parents age. Single parents get royally screwed. IRAs/401ks (balance not that years contribution)/primary residence exempt from calculation
Income in students name = anything over @ $3,000 50% goes to EFC</p>
<p>Thank you so much for all your replies! WOW, this is the place to get answers I see. The last reply mentions IRA's/401K's , they do not take the balance of that into consideration -do they????? We soon will have 6 kids, so 5 still at home when this oldest son goes to college. Husband generally makes about $50,000 a year, with about $3,000 a year going to 401K for us. We have about $30,000 in 401K now at our ages (in 40's). I definetley will not consider a school that uses CCS as our house & property is worth a nice chunk (we own land) and being rather low income, that would just not work for us. We don't make much, but are Extremely frugal with our money, are debt free with a 6th kid on the way -with money saved in the bank. I really don't want to be penalized because we saved when others spend lavishly-if you know what I mean. We drive cars that are almost 20 yrs old with husband fixing them himself- just to save for a rainy day, Roof needing replaired, what not. I really did not want to get my son a Car for College, if we don't have too. He wants to go to a place that is only 35 miles from home, so we could get him on the weekends. It is just a state school, nothing elaborate. That is what he wants. I did one of those calculators the other day, it had some questions I did not understand how to answer, so not sure it I got correct results, but sounded like we would have to pay about $1,800 for Family contribution. Does this sound right? After this, they offer work study (I want him to get this!!), loans (you pay back --it is better to get those in his name or ours???) and grants (free $$). Thanks so much for all of your help!</p>
<p>I also did not understand about OVER-PAYING on your state taxes to help you with all of this--and having that TAXED the next year---highly confused here?? My husband does not even claim all of us on his W-2 (I think that is what it is) so we get more money back from our Taxes each year. We always pay in MORE throughout the year so we get a nice Chunk at Tax time, this year approx $6,000 back from Federal (Additional child tax credit helps us, we do not get unearned income), and $1,200 from State. Will those Big checks have to then be reported as INCOME on these Fasta's or whatever?? Confused.</p>
<p>Another recommendation: apply for your FAFSA pin as early as possible; you can request a PIN October 1st of this year. Also, don't lose you PIN, as my sister did this year, which she discovered when she went to refile for my niece's sophomore year...</p>
<p>$6000 back from a federal tax return? WOW that sure seems like a lot to me.</p>
<p>$500 a month??? Have you thought about actually paying only the taxes necessary and using the $500 a month to invest?</p>
<p>Pretty sure that uncle sam is much appreciated of using your cash interest free.</p>
<p>Its nice to get a lump sum in Feb, but you could do the same with a christmas club</p>
<p>Yes, income tax refunds are income in the subsequent year. It would have been income in the prior year if you hadn't overpaid your taxes, so the nature of the funds coming in is considered income.</p>
<p>And, as pjp mentioned, you're simply giving the Federal government an interest-free loan of your money. Very nice of you, but do you really want to do that, when your money could be working for you rather than the Feds?</p>
<p>another follow up. It is the W-4 where you claim the # of exemptions which ultimately determines the amount of federal withholding.</p>
<p>I always itemize (it sounds like you do also). As such you get a deduction for the amount of taxes (state, local, school, etc) that you pay. If you overpay state taxes, and get a refund, it is taxable.</p>
<p>ie you deducted the amount of state taxes you paid in the previous year (say 2005), but when you filed (sometime before jan and Apr 15) your State return, you got a refund. So the taxes on that overpayment were not paid in 2005 because you deducted it from 2005 federal return. </p>
<p>Hope I'm making myself clear here.</p>
<p>Still, you are leaving some additional income on the table. </p>
<p>Just looked at the tax tables briefly. For $50 k of income (no deductions at all taken out) the total of the tax liability is $6749 (MFJ). If you are overpaying by $6 k....WOW.</p>
<p>Listen, I am not that bright, I am still confused here, AM I supposed to be paying income taxes on this $6,000 I am getting back this year --ON next years taxes or something?? Yes, I know it is not that bright to do what we do, but personally, not sure where to invest--might not have the discipline & having done it this way for years has helped us pay off our house VERY early-always slapping that big sum onto the mortgage when it came, to us, it was like a savings plan and we made ourselves live within what we got each week (knowing it could be more, but feeling good that we could live on it just fine). Now we have no debt. Why would I have to count this as income if It was already counted (when I didn't get it -letting the governement use it???). I am really confused now, I never put what we got back into the next years Taxable income? I never heard of that? I must be missing what you are all trying to tell me here???</p>
<p>As far as I know, yes, you are supposed to pay income taxes on the amount of the refund in the year in which you get the refund. Take 2005, for example. The extra amount withheld in 2005 is deducted from your income in 2005 as taxes already paid. So you didn't pay taxes on that extra amount in 2005. When you got it back in 2006, it is now added income in 2006, on which you need to pay taxes (because you didn't pay in 2005).</p>
<p>Federal tax return $ is not taxable income.</p>
<p>"Yes, income tax refunds are income in the subsequent year."</p>
<p>I don't think that's quite right. If you itemize deductions, a state income tax refund for 2005 is reported as income on the 2006 federal income tax form, but federal tax refunds are not income. A federal refund has already been taxed. The state refund was not taxed. That's the difference.</p>
<p>I'm not sure what happens with a state income tax refund if do not itemize deductions.</p>
<p>Ok, thank you last 2 posters, that is what I thought. I have been reading the advantages & disadvantages of receiving a Large Federal refund & Nowhere have I seen that these (already taxed) refunds are supposed to be taxed again in the next filing year. If that is the case, the IRS would be all over me by now and many of my friends. The only deductions we do is the Children (I have 5, soon to be 6)--and take the Additional Child tax credit as we are eligable (this is not Unearned income, but something different). We have only done the long form 1 year when we sold a house. Otherwise it is always 1040A for us. We probably should put the correct exemptions on our W-4 to reduce this refund, I do agree! Are these refunds asked about on the FASTA? If so, I need to really get some things changed!</p>
<p>I stand corrected, and apologize.</p>
<p>You did say that you use the 1040A. If you income is less that $50,000, you may find yourself eligible for the simplified needs test, which means you don't have to deal with assets. If you do qualify, I wouldn't count the tax refund, since it's an asset, like savings, and not income.</p>
<p>If you don't qualify, though, I think (and could be wrong again) that the refund is considered in your FAFSA, because once you receive it, it is "available" to be spent on college. You may decide to pay down your mortgage, but FAFSA doesn't care about that.</p>
<p>Oh, and congrats on the upcoming 6th!</p>