I am enrolled at a state university for Fall 2016. I applied for Financial Aid using the FAFSA and completed the processing in January. I received a preliminary award letter from the college saying I was eligible for federal and state grants and federal loans.
I checked on the status of any state grants I was eligible for this week, and found that I was ineligible, which did not make any sense to me. I receive SS Disability Benefits of less than $9000 per year.
I called the state student assistance authority that gives the grants and they said that my records show that the university corrected my FAFSA to include the SSD benefits on question 45i.
I called the university to find out what happened and was put in a queue and FA would respond in 48 hours.
I called the federal student information line that you can call about questions regarding the FAFSA. I explained the situation the a representative who told me that the college was falsifying a federal document by including my SSD benefits on the FAFSA.
I then received a call from an FA officer at the university who left me a voicemail stating that she could not figure out why I was confused about the corrections on the FAFSA, she said all she had done was include my SSD benefits on question 45i. (I am keeping that message.) I called her back and explained why I was upset and she said a compliance officer at the university told her to include that income on the FAFSA.
After getting the compliance officers name and phone number, I left her a voicemail asking her to call me back. It was Friday afternoon so I have to wait until Monday. In the meantime, I am going to call the department of Ed to inform them of the problem, and my university’s ombudsperson though I have little hope of the latter being effective.
I am worried not just about myself but if this is a systemic issue, other students may have similar issues and not know about it or know how to handle it.
Any advice from people experienced in FA would be much appreciated!
My understanding is that at least some of your SSD benefits can be taxable, and therefore are properly reported on FAFSA line 45.i.
It is worth noting that Social Security Disability benefit payments are taxed differently than other income. Generally speaking, only half of your Social Security Disability benefit payments are counted as taxable income.
Just because you haven’t paid tax on the SSD benefits doesn’t mean that they are not taxable. Regular taxable earned income (salaries and wages from work) is not taxed if total income does not exceed the available deduction. It’s likely that your SSD benefits have never exceeded your allowable deduction, and that’s why you have never owed tax on them, but that doesn’t mean that they are not (at least partially) subject to tax.
For example, my kid earned $3,000 at a summer job last year, all taxable earned income, but she didn’t pay a cent of tax on it because the standard deduction for a single dependent is up to $6,300 of earned income. So, she had taxable income, but paid no tax.
When I spoke to the rep at the FAFSA call center and I explained the situation, she said I was correct and that untaxed SSD benefits are not included on the FAFSA. Does it matter if they may be taxable if I exceed a threshold when I have never exceeded the threshold and therefore, have never paid tax on them?
How do I determine what may be taxable SSD benefits when I have never exceeded the standard deduction or had any other income while receiving SSD benefits?
Taxable income is anything that is used to determine your tax liability, even if that liability turns out to be $0 (i.e. you owe no tax). So yes, if the SSD benefits are considered to be at least partially taxable, the taxable portion will need to be reported on FAFSA line 45.i., even if your total taxable income was below the standard deduction amount.
I can see the confusion. In you post…it says to INCLUDE disability benefits.
It is very possible this was a genuine human error…if the college thought these were regular disability benefits…and not Social security disability which was untaxed.
Maybe I’m arguing semantics, but I just looked up question 45i, and it says not to include any untaxed income including SS Benefits. Since my benefits were untaxed, they meet that requirement. It doesn’t say any untaxed income that may be taxable, but was not taxed.
thumper1- yes, I used that wording because the rep at student aid on the web call center used it. You are right that it may be human error. I hope that is the case.
@MelsaManton my kid had a small merit award and a Direct Loan when she was in college. We actually got an email from the school saying both had been cancelled. Say what?? Kid was on the phone first thing Monday morning (these things always seem to happen on weekends). It was an error…someone goofed. By the end of the business day on Monday, it was all corrected…and those two little money things were added back in.
Here you go: http://talk.collegeconfidential.com/financial-aid-scholarships/1720008-fafsa-and-ssdi-disability.html
SSDI is not reported on the FAFSA. Other forms of disability income are reported, but SSDI is not. Should you be selected for verification, you may be asked to detail all forms of income, and all SSDI would be reported there. However, it still would not be counted as income for FAFSA purposes - it is simply used as documentation of how the family was able to live on the reported income.
Untaxed income means income that is not subject to income tax. It does not mean income that is subject to income tax but no tax was due because the total income did not meet the threshold for having tax assessed.
$9k of potentially-taxable Social Security is little enough that none of it is taxable, assuming no other income. The OP would have to have more than $20k of other taxable income before any of the SSA benefits were taxable. If the OP filed a tax return, the amount on Line 20b would be zero.
First of all, the FAFSA rep is overstepping his/her position by saying the college “falsified” anything. That rep does not have access to anything but what the caller SAID … so a judgment cannot be made. Offering advice or an answer to a specific question is all the rep should do … not make a determination of guilt about what was done in the aid office.
If the SSDI was not taxed … that is, if there is and did not need to be a tax return filed with taxable SSDI reported on the return … then the taxable amount is 0. Therefore, no SSDI is reported on the FAFSA.
The compliance officer may have been asked by the aid officer if untaxed disability income is reported. It is. Only SSDI is not reported as untaxed income. If yours is SSDI, please send the school aid office a print-out proving that your disability income is SSDI. Ask the aid officer to show it to the compliance officer. I would bet that will fix things (if not, there is a bigger issue - in that case, please report back here for advice).