<p>Much of daughter's income is self-employment income from piano playing. FAFSA question 36 income tax is only $34, yet she owes over $600 in self employment social security, medicare etc. taxes. Is there an appropriate place to account for this expense on the FAFSA?</p>
<p>No, allowances for employment taxes (as well as state taxes) are part of the EFC calculation. That’s why FAFSA asks how much money was made from working. Unfortunately, the allowance only covers the employee portion, not the full amount that self-employed individuals pay. The good news is that students do have an income protection allowance of over $5,000 so it sounds as if your daughter’s income will not be contributing much, if any, to your EFC.</p>
<p>I am not knowledgeable about self employment stuff, but isn’t half of self employment tax allowed as a pre AGI deduction on the tax return? That being the case the AGI (which is what is reported on FAFSA) already includes the deduction for 1/2 of it. The other half will be calculated as an allowance in the EFC formula just like for non self employed individuals.</p>