<p>One of the profile questions is:</p>
<p>*Estimate the income tax your parents will pay for 2008 using their 2007 IRS Form 1040, line 57 and 2008 pay stubs and other financial documents.</p>
<p>I am confused about this. Firstly, the 2008 1040 has the total tax on line 61, not line 57 as on the 2007 form. Mainly though, I am curious as to why only federal tax is taken into consideration and not state/city/county taxes? Should I be adding the state/city/county to the total found on line 61, since the above statement does say to utilize "other financial documents"?</p>
<p>It doesn't seem fair that only federal taxes would be counted. If so, it seems that folks who live in states without an income tax would have a benefit here.</p>
<p>Life isn’t fair.</p>
<p>Each state has a different tax structure: Income, Sales, Property, excise, license, fees, etc. In general, the total of taxes is relatively similar, adjusted a little for the amount of services provided (you pay more and get more). That said, there are some tax hells out there. However, that is your choice where you want to live, and it isn’t anyone’s obligation to subsidies that choice (more aid).</p>
<p>So, if you wanted a true adjustment for state effects, then you have to include all the other taxes. In addition, state income taxes may (don’t know) be taken into account through Schedule A - Deduction for State Income Taxes. If it is high enough to be an issue, then it would show up there.</p>
<p>I just used the EFC clac on this site. There is an adjustment for State Taxes that is based upon the State of Residency. Odd that my midwestern state had a higher adjustment than California.</p>