<p>
So 25% Fed + 5% state + 7.65 FICA + (100 - (25% Fed + 5% state + 7.65 FICA)) * 47% FAFSA = almost 67%; in other words you get to keep 33 cents of every incremental dollar.</p>
<p>If you are self-employed it’s about 26 cents on the incremental dollar.</p>
<p><a href=“http://www.ifap.ed.gov/efcformulaguide/attachments/101310EFCFormulaGuide1112.pdf[/url]”>http://www.ifap.ed.gov/efcformulaguide/attachments/101310EFCFormulaGuide1112.pdf</a></p>
<p>This is the info ^ referred to. It includes the protection and tax calculation tables, etc.</p>
<p>notrichenough… nice summary post should be in a FAQ thread at the top of this FA forum for all to see and get a good understanding of. I’ve been reading CC for a couple years and yours is the first post to explain FAFSA so clearly.</p>
<p>I hadn’t run the formula in a couple of years, but this thread inspired me to analyze this year’s EFC. Without going into detailed numbers I broke out the Parent’s Contribution from AAI, as referenced by notrichenough above, proportionally against our income and assets.</p>
<p>Our EFC from income was 20,369 and from assets was 14,750 for a total parent contribution of 35,119. And that turns out to be about a 22% contribution from last years AGI and a 5% contribution from our total FAFSA assets (only 2% of our total assets, if I factor in retirement accounts and home equity). </p>
<p>Clearly the EFC formula assumes a much bigger chunk of current income goes to college payments but a smaller proportion of one’s assets. Of course one can choose to make the payments out of any stack of available dollars 
.</p>
<p>It would seem that one way to increase your allowances against income (and thus reduce EFC) might be to increase your federal taxes paid during the year. Of course, this would just result in getting a refund on your taxes, and would show on your 1040, but I don’t see anywhere in the formula where a federal tax refund is added back in to income. What am I missing?</p>
<p>
This won’t work. What gets reported on FAFSA is the actual tax due (line 55), not how much you have paid or have had withheld (line 72).</p>
<p>^^^“Taxes Paid”, as entered in the formula or FAFSA, is a net amount. It is the amount actually owed as calculated on your tax return. Overpayments/refund amounts do not factor in at all.</p>
<p>Sorry for the cross-post!</p>
<p>You can withhold more in Federal taxes than you owe, but Line 55 is your actual tax bill (not including SE tax) so that isn’t easily open to manipulation. Also there are checks within FAFSA that will flag any file where the tax amount is out of line, so you’d risk a potential audit.</p>
<p>Ok, thanks. I got thrown by the actual terminology on the CSS profile, which I guess is incorrect then, it states on line PI-140a: </p>
<p>“Enter the income tax your parents paid for 2010 from their 2010 IRS Form 1040, Line 55”.</p>
<p>This wording on the profile is incorrect then, right? It shouldn’t be “tax your parents paid”, it should be “tax your parents owed”?</p>
<p>Well… there is some semantic hairsplitting there. Technically, I suppose, if you pay more than you owe, you aren’t just paying taxes, you are giving an interest-free loan to the gov’t.</p>
<p>I guess it would be totally unambiguous to just say “Enter the amount from IRS Form 1040, line 55.”</p>
<p>When the 1040 is finished before the CSS profile is filled out, “paid” is correct; a refund of taxes withheld but not to be paid may apply, or there may be a check attached to the 1040 as additional taxes paid if not enough was withheld.</p>
<p>Mom2,</p>
<p>Thanks, I guess it was your clear analysis of the numbers that I found so helpful.</p>
<p>Yes, No 1 Son has taken 7 AP classes and 8 tests, and UIUC should accept most or all. Additionally, he was automatically placed in the Honors program.</p>
<p>Kajon, now I’m *double *flabbergasted. A state flagship offering full ride for merit, and to a “rich” family like mine? Pinch yourself, and then pinch the person next to you. And I thought kmcmom was “lucky.” I may not sleep tonight!</p>
<p>I am sitting in $40 motel room about two miles from W&M tonight, getting ready to expose No. 1 Son to what could be another “Dream” school that is entirely more affordable than NU. Wish us luck.</p>
<p>Best thread of the year. Hands down.</p>
<p>A million thanks to our brave dumbparent for starting it!</p>
<p>And, good luck at W&M this weekend!</p>
<p>Does does W&M mean?</p>
<p>^ W&M = William and Mary.</p>
<p>Thanks happymom. </p>
<p>I had no idea this would go well past 100 posts, but I’m so glad it did…it turned into an omnibus “finaid seminar” whose value far exceeded any other information vehicle I had browsed, read, or sat through. Thanks to all the dedicated forum hawks and parents for the tough love, and for the occasional commiseration, too.</p>
<p>dumbparent,</p>
<p>In April of 1999 I was pretty much in your shoes. S had narrowed his choices to JHU, WashU, and (to him) regrettably, UIUC. UIUC wasn’t even in state. He had only applied there because the app was so easy and I insisted on at least one public.</p>
<p>Well, $0 from both JHU and WashU. A merit scholarship from UIUC that brought the cost to about what we would have paid for UIUC in state.</p>
<p>Fafsa EFC of $88,888, a number I will never forget.</p>
<p>I asked him which of the 2 he wanted me to deal with. He said WashU. I now know that was ridiculous. However, I spent a lot of time on the phone w/the FA head, we went over likley # for all 4 years. It came out that our family would be (between us and S) $40,000 in debt (loans). The gentleman’s response was also something I’ll never forget. “That’s not uncommon four our graduates”. I responded, “It may not be uncommon, but it is immoral”.</p>
<p>He reluctantly went off to UIUC with the idea to transfer elsewhere, but enjoyed it so much. Since his graduation in 2003 he has been living OOC, doing very well. NO DEBT.</p>
<p>Wanted to add, that year we got the outrageous EFC, our income was only $60,000 AGI. Not much equity, retirement, some, but lots saved for college. One other dependent.</p>
<p>You are not alone. I have two friends are in the same boat as you are. One is attending NW with parents retirement savings. The other one decided to “settle” at the state flagship. Both are quite happy. We shall see how they turn out in 2-3 years. Life is tough…</p>
<p>Good luck with W&M, my alma mater. I went to W&M because my parents couldn’t afford my dream school - UNC (Chapel Hill). I think my parents paid $30 for my first year at W&M so it was obviously a great choice. I’m sure I would have loved UNC, but I loved every minute in Williamsburg. </p>
<p>Looking forward to your feedback.</p>