I’m completing the FAFSA today with my daughter and I’m hung up on the question asking for the amount of student grant and scholarship aid reported to the IRS in the adjusted gross income. Am I right to assume that they mean reported on my daughter’s AGI (not the parent one) since this question is in the student section of the FAFSA?
She didn’t need to file taxes in 2015, so there was no AGI reported to the IRS. I’m assuming that would be a zero, then. However, on her 1098-T she did receive more in scholarships than was billed for tuition, so you could say there was some income there, but apparently it wasn’t enough to make her file taxes. She didn’t have any other income that year, just the scholarship over-payment. Just gathering some thoughts on whether it seems correct to leave this one blank since there was no tax return, thus no AGI reported to the IRS.
I’ve been looking on my own tax return in case they meant it would be included in the parental AGI, and I’m not finding any indication of that. Thanks.
You are right; the question is about an amount that might be included on the student’s tax return, not on the parent’s return. If your daughter didn’t file a tax return because she didn’t have enough income, even with part of her scholarship money being taxable income, than the answer to this particular FAFSA question is zero.
I’d like to piggy-back on this question @BelknapPoint since it’s very similar. We’re filling out the fafsa too, but student’s AGI did include the scholarship amount. For the sake of argument, let’s say that:
all wages (including the scholarship) was 5000 (2000+3000)
wages from work-study was 2000
the taxable scholarship was 3000
AGI was 6000
when we get to this question on the fafsa (question 44c and d), the DRT didn’t transfer either of these amounts (the 2000 for work study and the 3000 for taxable scholarship), so we plugged them in.
I’m wondering if we’re doing it right, because fafsa is telling us to ‘check’ our results and correct them because they don’t match the totals entered.
I’m just wondering if plugging these amounts in on question 44 is correct or not. Thanks in advance!
Yes, those numbers need to be reported on FAFSA so that they can be removed from the student AGI figure. They are excluded from consideration in the EFC calculation. They won’t be automatically entered if DRT is used, because DRT doesn’t distinguish between different types of taxable income.
I don’t know why you are getting a FAFSA alert to check your results. If AGI really was $6,000 (or less), why did the student file a tax return? Was there income tax withheld from wages and a refund is being requested, or did the student have more than $1,050 in unearned income?
@lz57c4 When we did this last year, the DRT did bring over the total AGI ($7,000 in our case W2 income was $3,000 and taxable scholarship was $4,000), the income from working (same number $7,000) and the tax paid from my D’s tax return.
The FAFSA will subtract the amount of taxable scholarships that was reported as part of AGI from total income with question 44d.
So it’s important that you use the total amount for AGI (work, taxable scholarship and other income), and income from working (work and taxable scholarship), and then put taxable scholarship amount only in question 44 d. So then only work income will be left.
But work income from work study (need based employment) also gets subtracted on FAFSA from student income, in question 44c.
Yes, the DRT will bring over the AGI, income from working and tax paid, but amounts for question 44 d and 44c have to be entered by hand.
So for you it would look something like this:
question 36: student’s 2015 AGI $6,000 (transferred from IRS)
question 39: student’s 2015 income earned from work $5,000 (transferred from IRS)
question 37: student’s 2015 U.S. income tax paid $
question 44 c: student’s taxable earnings from need based employment $2,000
question 44 d: student’s college grant and scholarship aid reported in AGI $3,000
@sharmda, yes with that amount she wouldn’t be required to file a tax return, but for 2016 she probably will, if she has an excess of scholarships for both semesters.
@mommdc yes, it will be the same situation for spring semester 2016, plus she worked full-time during the summer and now has a job on campus, so she will be filing for the first time. Thanks for your help.
re @mommdc q, yes rest of agi was from int and gains on 1099s. thanks for the info. My confusion stems from fafsa not seeming to think this makes sense. we’ll go ahead and submit. if schools have q’s we’ll just communicate directly with them to make sure they understand.
re @BelknapPoint q, yes unearned income required tax return, as well as tax refund (had to pay tax one year so made sure she had some withholding to cover it)