I know this is early, but I am very confused about student income/checking and savings accounts. I currently have a summer job and plan on making less than $3000 by the time I go back to school. I have a checking account where I had my financial aid direct deposited into and a savings account with the minimum amount necessary for them not to charge interest and so I can open a credit card account. When filing the FAFSA in 2017 I don’t think I will have any money left in my checking account because it will all be used for college or to pay rent/food/etc, but I will still have the $300 in my savings account because it’s the minimum required. I have researched and saw that this will affect my EFC by 20% so my EFC of 0 will probably increase to about $60, which is annoying and I don’t know how else to change this and how I can make this not the case.
Additionally, my mom makes about $16,000 a year, so I have always skipped the part where they ask for her bank assets and such. If my mom has a checking account with a debit card under her name and her social security number, and I am an authorized user in that checking account will that affect my EFC? Is that part of my asset or hers since I am an authorized user?
I have a full ride scholarship from my university that covered everything this past year. How does this affect my FAFSA next year and my income taxes with my summer job? Will my summer job affect my FAFSA/EFC when I file in 2017?
Thanks for any help someone may offer! My mom only speaks Spanish, so I have to do all the FAFSA and financial aid stuff.
If you have it in the bank on the day that you file FAFSA you have to report it. The only way it won’t have an impact on your EFC is if you’re not required to report assets because of your income level.
If your mother qualifies for simplified assets or automatic $0 EFC (and if her only income is $16k she would), you will not have to report your assets either.
“I have a full ride scholarship from my university that covered everything this past year…Will my summer job affect my FAFSA/EFC when I file in 2017?”
No if you have merit-based scholarships. Maybe if you have need-based grants.
If your mom made under $25k and has one other qualifier such as:
could file a 1040A, or someone in the household received federal means tested benefit (free/reduced lunch, food stamps), or parent is a dislocated worker then the auto $0 EFC applies. Student income and assets and parent assets are not considered then as far as I know.
You said you were earning $3000 in the summer and it will be spent on school expenses by October when you file FAFSA again, but if you have a full ride, what are you spending it on?
Yes, if your scholarship exceeds the cost of tuition, fees and books, then it becomes taxable income.
You would report it on your own tax return, along with your work income.
On the FAFSA there is a question 44d about taxable scholarships reported as part of AGI and you would enter the amount of taxable scholarship which you listed on your tax return.
@mommdc I am spending the money I make during the summer to pay for my study abroad. My scholarship covers a certain portion but the rest I have to pay out of pocket, which is why I will have nothing in my checking account by the time I file for FAFSA and I will be using up all my summer job savings.
My scholarship does exceed cost of tuition, fees, and books, because it covers up to the COA with a scholarship the school offers based on need. I received a 1098-T from my school, but my accountant said that for my moms 2015 (she claims me) taxes it did not affect it, but it will most likely affect it next year for her taxes since the 1098-T will include Fall and Spring scholarship/financial aid.
If my scholarship becomes taxable income will it be counted toward the $6000 income thing that FAFSA gives students so they don’t have to pay 50% of the income or I don’t know how it works. Along with my work income?
Also, I did not know about the FAFSA being opened earlier this year. I read and it said that the 2015 tax returns will be used on this years FAFSA. If that is so, then my summer job will not be included in this FAFSA application correct but for the following FAFSA (I think it would be like 2017-2018??? I’m not sure) right? I did not have a job until this summer, so I did not report any work income on the income taxes for 2015. If the 2015 taxes will be used for the October FAFSA, will we have to go back and update with 2016 taxes or is it just accepting 2015?
@mommmdc Will the excess money from my scholarship be included in the FAFSA student income protection thing? I saw that there was a difference between unearned and earned income, is my excess scholarship money unearned? And does the protection only include earned income (which I assume would be my summer job because I work for it??) This is honestly so confusing to me
FAFSA has started using prior-prior year’s taxes. You will use your 2015 taxes/income for the FAFSA you file in October for the 2017-18 school year. You will not go back update it with 2016 info. You will use you 2016 taxes/income in October 2017, when you file the FAFSA for the 2018-19 school year.
Correct! Your job in the summer of 2016 will be included in your income/taxes for 2016.
So it will affect your October 2017 FAFSA for the 2018-19 school year.
The taxable scholarship money that is given to you has nothing to do with your mother’s taxes – it is income to you, not your mother, even if she claims an exemption for you on her taxes as her dependent.
For the purpose of determining filing requirements and standard deductions, taxable scholarship money is considered to be earned income, and for last year and this year the standard deduction amount for earned income for single taxpayers is up to $6,300. If your taxable scholarships (the amount of scholarships that exceeds the amount of tuition, fees, and required books and supplies) plus any income from a job is less than $6,300, it may be the case that you are not required to file a tax return. If you have unearned income (bank interest, gains from investments, etc.), this also must be considered when determining whether or not you are required to file a tax return.
For the purpose of determining whether or not you are subject to the so-called “kiddie tax” (IRS form 8615), taxable scholarship money is considered unearned income, and can subject you to a higher tax rate than you would otherwise face. Talk to your accountant about this, but make sure he/she understands how taxable scholarships are treated. Again – taxable scholarships are income to the student (that’s you), not the parent, and are reported on the student’s tax return, if the filing threshold has been met.
@BelknapPoint I know for a fact it will exceed $6300 for the 2016 taxes because my scholarship covered my room and board and everything else (the COA is 19,000 and only about 4000 maybe 5000 max was for tuition and books and the rest was for the meal plan, room and board, and the excess was direct deposited into my checking account). and it will be for both Fall and Spring (the 19000 all together)
What I am asking is will the scholarship money be included in the calculation of my EFC?
@BelknapPoint Okay, I just checked my 1098-T and I think it will be easier with numbers. For 2015 I did not have a job because I wanted to focus on school. My 1098T says that I received $9560.50 in scholarships and grants, and $2443.48 was payments for qualified tuition and related expenses. I did not file a tax return, my accountant didn’t say anything he said that it did not affect anything?? I’m not sure if this was a mistake? Now I am worried.
However, for the 2016 year that will most likely be higher because It will be including Spring and Fall 2016 and my summer job. Which I believe will most likely surpass the $6300 and from what I have gathered I will be filing my own income tax next year for 2016. I know that FAFSA has like an income protection for students that is around $6000 something, but I was wondering if the scholarship that is not used for tuition expenses is also included in that protection number or if my total income (scholarship and working job) will have the scholarship money subtracted from it and only the remainder, my working job, will be used toward the protection figure and will be used to calculate my EFC?
So for 2015, based on these numbers, you had up to $7,117 in taxable scholarships. Unless you spent $817 or more of that on text books and other required course materials, you should have filed a tax return and paid income tax on any amount that exceeds the $6,300 standard deduction for single taxpayers.
@BelknapPoint I’m pretty sure I spent that amount on textbooks because I bought them all from the bookstore and I had like 4 textbooks for each class. So I should be okay? If I did not spend this much on textbooks what happens???
Do you have a receipt from the bookstore or can they look up how much you spent? You should keep records every year, your 1098T, your tuition statements, in case there are questions about this from IRS in future.
The 1098T can be used for two different things.
The parent can claim qualified education expenses (if tuition and related fees plus books exceed scholarships and grants) for American Opportunity tax credit. Your accountant probably meant in your case since scholarship was more than expenses, that your mom did not have to worry about it, since she couldn’t claim the credit.
And the 1098T provides information about taxable scholarships. So when you add up tuition and related fees plus books, then subtract from scholarship, the difference is taxable scholarship income.
If you list taxable scholarship on your 2015 tax return, then when you file your FAFSA you would put as AGI the taxable scholarship amount, then as “income from working” the same amount and in question 44d of FAFSA it asks how much of taxable scholarship you reported in AGI and you would put the amount. That will then cancel out the amount of taxable scholarship that was reported as part of work income.
According to your 1098T you had $9560.5 in scholarships and $2443.48 in tuition and fees. So the difference is $7117.02. Reduce that by the cost of textbooks you bought. That will be your taxable scholarship amount.
You need to file a 2015 return for you as a dependent of your mom. It probably be a few hundred over the $6300 standard deduction.
For 2016 taxes you will report your work income and the taxable scholarship for the whole year.
Then on the 2018/19 FAFSA you will report all income in AGI, W2 income and taxable scholarship in “income from working” and then list in question 44d again the amount of taxable scholarship that was part of the AGI and that will be subtracted from your income.
Next year you might owe much more in tax since you will have $14,000 or so in taxable scholarship. Also find out if you owe taxes to the state you live in and/or state the college is in for taxable scholarship.
