<p>Last year when I completed the FAFSA my daughter's scholarships used for lodging food (the taxable part) was included in her AGI (line 35 of the SAR), then the scholarship portion of her AGI was separated out at line 43d, her income from work was on line 38. Lines 38 and 43d added together equalled line 35 her AGI. Everything worked out fine.</p>
<p>This year I went to fill out the FAFSA and put in her AGI, including the taxable portion of her scholarships, I put in the scholarship amount on the line for that, I put in her income from wages on the applicable line. But when I got to the end of the income section I received an error message stating that the income was too high for the other entries (something like that). No matter what I did with the numbers it wouldn't let me proceed. I contacted FAFSA through the on-line chat and the guy I chatted with told me the AGI does not include the taxable scholarships, only her income from wages etc. He even told me her taxes were prepared incorrectly. </p>
<p>So I went back on the FAFSA and for AGI I just put her income from work, and I left the taxable portion of her scholarships on the appropriate line and then the FAFSA did finally let me move on. So her SAR report will show AGI of $X,XXX and her taxable scholarships of $YY,YYY but her tax return is going to show AGI of $X,XXX plus $YY,YYY.</p>
<p>I'm nervous about submitting the FAFSA this way because it won't match up with her tax return. Does anyone have any experience with this or knowledge about it? I need her SAR by 3/9 to submit for one of her scholarships.</p>
<p>Something is not right as your scholarship amount left after subtracting tuition and books is definitely taxable and included in her AGI. I just completed my son’s. You are also correct that the taxable scholarship amount and work study earnings would be subtracted from the income in FAFSA. I don’t know why your amounts don’t add up but the only way I can see that is if you somehow wrote a number in AGI that is less than the other amounts totaled.</p>
<p>Are you sure you put the taxable amount of the scholarship on 43d and not the total amount?</p>
<p>You talked to an idiot, unfortunately. Sorry to be so blunt, but the degree of incompetence demonstrated by those on the FAFSA help line is very frustrating.</p>
<p>Yes, you do report the taxable portion of grants/scholarships in AGI. The income on line 1 (EZ) or line 7 is what you put for “income from work” on the FAFSA. You may have excluded the scholarship money from this amount … but you should include it. Follow the FAFSA instructions for this. Her AGI is probably the amount on line 1/7, unless she has other income or student loan deductions. If you do this, you should not get any error messages.</p>
<p>In looking at the worksheet I don’t think #38 (income earned from work) is even used in the calculation unless that person did not file taxes (hence no AGI).</p>
<p>Thank you for your help. I did make the mistake Kelsmom pointed out. When I put money earned from work I did not include the taxable scholarships since that wasn’t “work” but since it is part of the AGI it looks like I am supposed to include that. I’m not getting the error message anymore - thanks again.</p>