FAFSA - Income taxes Paid 2010, before or after

[MyCollegeKid]

<p>On the FAFSA....it asks what taxes the parent paid in 2010. It seems they want the number after you deduct the education credit. Then on same page of tax page in FAFSA, it asks you what the credit was?</p>

<p>Are you showing your taxes paid before or after the education credit.</p>

<p>Just curious?</p>

[sk8rmom]

<p>The instructions are very clear on which line from the tax form to put on FAFSA. The instruction for question 84 is:</p>

<p>

84. Income tax. Enter the amount of income taxes your parents paid in 2010 from IRS 1040—line 55; 1040A—line 35; or 1040EZ—line 11. They should not copy the amount of federal income tax withheld from a W-2 Form. If they did not pay any income tax for 2010, they should enter zero (0).

</p>

<p>Education tax credits are reported separately in question 91:</p>

<p>

a. Education credits. Enter the total amount of American Opportunity, Hope, and Lifetime Learning credits your parents received from Form 1040—line 49 or 1040A—line 31. The American Opportunity, Hope, and Lifetime Learning tax credits benefit students or parents who pay tuition and related expenses for attendance at least half time in a degree-granting program.

</p>

[MyCollegeKid]

<p>Thanks. On the Current Assets…I guess they call current assets as things like cash, marketable securities, (and not less debt/credit cards). Trying to do this before a deadline.</p>

[sk8rmom]

<p>There are several asset questions…88 is for cash, checking, savings and 89 is for investments. FAFSA does not consider any type of consumer debt. But if there is a lien against a reportable asset, you would deduct that because assets are always reported at their net value. You may find it helpful to read the instructions for each question as you go along:</p>

<p><a href=“http://studentaid.ed.gov/students/attachments/siteresources/2011-12CTF.pdf[/url]”>http://studentaid.ed.gov/students/attachments/siteresources/2011-12CTF.pdf&lt;/a&gt;&lt;/p&gt;

[swimcatsmom]

<p>You don’t get to choose what you report. Just follow the instructions. You are told where to report what, and there is a reason for it. For the taxes the instructions are:

84. Income tax. Enter the amount of income taxes your parents paid in 2010 from IRS 1040—line 55; 1040A—line 35; or 1040EZ—line 11. They should not copy the amount of federal income tax withheld from a W-2 Form. If they did not pay any income tax for 2010, they should enter zero (0).

</p>

<p>Then you are told to report the credit as follows:

Education credits. Enter the total amount of American Opportunity, Hope, and Lifetime Learning credits your parents received from Form 1040—line 49 or 1040A—line 31. The Hope and Lifetime Learning tax credits benefit students or parents who pay tuition and related expenses for attendance at least half time in a degree-granting program. These tax credits are subtracted directly from the total federal tax on a tax return. For more information about these tax credits, visit the IRS Web site at

</p>

<p>The number reported on IRS 1040—line 55; 1040A—line 35; or 1040EZ—line 11 is the actual taxes paid after the nonrefundable part of the tax credit. The amounts from Form 1040—line 49 or 1040A—line 31 are the non refundable part of your credit that reduced your taxes. </p>

<p>Because the tax has been reduced by the credit this also reduces your allowances against income in the FAFSA formula which would increase your EFC. The intent of the credit is not to increase your EFC, so you are asked what your tax credit from the appropriate line was so that the allowance for taxes can be increased in the EFC formula, making your EFC what it should be without the credit.</p>

<p>For instance suppose your AGI is 50,000 and your taxes without the credit would be 5,000. The taxes are an allowance against your AGI in the EFC formula so would reduce your income in the formula to 45,000.</p>

<p>If you take a 1500 education tax credit then your taxes are reduced to 3500 so your allowances for taxes in the EFC formula would only be 3500, meaning your income in the formula would be 46500 which would lead to a higher EFC. To avoid that, the FAFSA asks how much your credit was (1500) and uses that 1500 as an additional allowance against your income, reducing the income to 45,000 in the formula, just as if you never took the credit.</p>

<p>Just follow the instructions.</p>

[MyCollegeKid]

<p>Thanks. I believe filling out the form it asked if current assets are above a certain amount. Maybe if they aren’t, you don’t provide more info.</p>

[sk8rmom]

<p>Yes, that’s right…the FAFSA uses skip logic to determine which questions to ask. Parents have an asset protection allowance based on the age of the older parent. If you answered “no” to the question about having assets in excess of that allowance, you won’t have to enter any more asset info.</p>