Ok…hopefully I figured out how to quote here.
His first choice is U of M - Twin Cities, second Duluth. A couple other state schools in there as well as “sure things”.
Yeah…I was kind of counting on it. My AGI is typically between 23-26K, so I thought we were a shoe in for at least Simplified Needs, if not auto zero. So, if 20% gets added to EFC each year that is 7K. Basically wipes out Pell dollar for dollar. It’s like they saved for nothing.
I could use some for HS tuition, but it would only be 3K.
So how are student owned 529s treated in regards to financial aid? Aren’t all the student owned assets looked at the same (20% to EFC)?
No. Student-owned 529 accounts are treated by FAFSA as a parent asset. Schools that use Profile for calculating need-based institutional aid may or may not do the same thing. With Profile schools, you will have to contact the FA office and ask how they want you to report a student-owned 529.
Student owned 529 are assessed at the 5.6% parent rate for FAFSA purposes.
Your parents didn’t save for nothing. They have saved a $30,000 gift for you to use towards college costs. Yes, this might need to be used instead of federally funded grant money, but it’s still a wonderful gift.
Are you sure you don’t qualify for reduced lunch? It looks like a family of four would qualify with income under $46,000. I think…
Scroll down to page 7 of this document.
Unless I’m misreading it…a family of four would get reduced lunch with an annual income of 32,631 – 46,435
We’re a family of 3 (myself and two boys), and they go by gross income plus any child support. My gross is more like 40K and child support is 12K. My AGI is so low due to over 10K going to FSA for dependent care, medical and insurance, and the rest is retirement.
Who is responsible for paying these taxes? Would it be on the Grandparents return or my son’s?
The earnings and therefore the tax liability belong to the account owner, which is your son.
This could be a significant amount of money. They invested about $100/month so I think almost half of it is earnings.
Who is the custodian for the UTMA account?
The grandparents.
The custodian should have (or have access to) all account information that will allow you to determine cost basis and estimate tax liability if some or all of the assets are sold.
Child support counts as income on the FAFSA too, doesn’t it? And 401k contributions as well.
So your income is really $52K but it’s reduced by your FSA contribution.
So is your AGI $42,000?
Someone…how much Pell Grant would a family of 3 get with that AGI?
@mommdc the OP mentions a FSA which is a flexible spending account. That’s not a 401k. But it does beg the question to the OP…did you make any contributions to a tax deferred retirement account?
It depends. If you qualify for Simplified Needs test, the asset questions are skipped completely, if you qualify for Auto-zero the asset and income questions are skipped. But otherwise, yes. Child support and 401K are added back in…FSA is too. At least the dependent care one. Not sure about the insurance premiums.
My AGI is about 25K. (Gross 42K - FSA and Retirement)
Child support isn’t included in taxable income.
Perhaps someone can clarify.
The 401k contributions, and child support are income sources, not assets. Not sure where that FSA contribution goes but it’s out of income.
The balance in your 401 is not an asset. FSA, you would have to check…
I don’t believe income sources (except student income) are excluded when you qualify for simplified needs or auto $0. In other words, these incomes are added in as part of the FAFSA calculation formula. I think…
This is the EFC Formula. If you go to Page 13 it has the worksheet for Simplified Needs. Line 1-3 are asking for AGI and income from work. At the end of line 3 there is a footnote that if this number is 25K or less (I guess it’s 26K now) to stop filling out the form. You don’t go on to question 4 filling out untaxed income.
https://ifap.ed.gov/efcformulaguide/attachments/071017EFCFormulaGuide1819.pdf
When qualifying for simplified assets (at least under the prior tax forms) adjusted gross income under $50k was calculated off AGI, so contributions tor FSA or 401k or other things paid with pre-tax dollars were not added back in.
The Pell grant might not be a lot for $42k, but sometimes qualifying for a Pell grant opens up other sources of money.
I’m trying to learn the UTMA laws. It sounds like they don’t have to distribute until 21. Is it still the asset of the child at 18 as far as FAFSA goes even if the grandparents decide to hold onto it until 21?